# Technical Analysis - Smoke & Mirrors?



## dragon8 (21 November 2010)

I am a newbie to tech analysis and have only studied it for a couple of months.
I would appreciate comments from forum users as to the success or otherwise they have had with tech analysis.  Sometimes I wonder if shapes on a chart become a self fulling prophecy such as when people see a head and shoulders and react accordingly.  There seem to be so many theories on charting that if one theory does not fit simply use another to explain away the one that did not fit.  I have yet to find one which will tell me where the market will be in 7 days but there a plently which will explain after the fact why the past share market action had occurred.  It almost seems that if one theory does not fit into the slot simply pick another which will, voila they say it goes to show it works.  I think not. I want to believe but it seems to be like my baby daughter playing with her shapes toy trying to fit a star into a round hole.  Eventually she gets one to work.


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## Gringotts Bank (21 November 2010)

My :

I only use two indicators, and even then, very rarely. 

1. If I'm already holding a position, a parabolic SAR can be an excellent stop for strongly up-trending stocks.  I curve fit it to the stocks historical data first (yes, this is quite acceptable for discretionary traders).

2.  Jurik has a few low-lag indicators.  If you really like indicators, that's possibly the way to go.  Personally I found very little difference to systems tested with versus without low-lag indicators.  And they're expensive.

Other TA stuff:  I use trendlines, particularly parallel lines.  They seem the most reliable by a long stretch.  There's a bit of an art to finding them too, which I like.  Use log charts.  Patterns (triangles, pennants) also helpful.. See Bulkowski.

Read through some of the threads on volume analysis on here.

Understand that "overtrading" is much less of a risk to your capital than holding onto losers.

The holy grail, *IMO*, is trading off gut feel.  The most powerful and rapid neural network is your subconscious mind.  And it's free.


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## Wysiwyg (21 November 2010)

Look at it this way. If you take a technical entry point into a security, it is only after that entry do you know if it worked or not. 
All T.A. is hindsight representation. A 50/50 bet. But! There may be certain technical markers that seem  to produce more certainty than others. After all, we are looking for repetition of an event to capitalise on. A better than 50/50 bet.


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## pixel (21 November 2010)

dragon8 said:


> I am a newbie to tech analysis and have only studied it for a couple of months.
> I would appreciate comments from forum users as to the success or otherwise they have had with tech analysis.  Sometimes I wonder if shapes on a chart become a self fulling prophecy such as when people see a head and shoulders and react accordingly.  There seem to be so many theories on charting that if one theory does not fit simply use another to explain away the one that did not fit.  I have yet to find one which will tell me where the market will be in 7 days but there a plently which will explain after the fact why the past share market action had occurred.  It almost seems that if one theory does not fit into the slot simply pick another which will, voila they say it goes to show it works.  I think not. I want to believe but it seems to be like my baby daughter playing with her shapes toy trying to fit a star into a round hole.  Eventually she gets one to work.




Hi Dragon8,
Your provocative title aroused my interest; I am somewhat relieved to find that it's only used to highlight the dilemma, by which many newbies find themselves confronted. It's also one that a number of dyed-in-the-wool fundamentalists level against T/A, thereby masking their ignorance and/or reluctance to accept a different paradigm.

Fact is: Neither T/A nor F/A can tell you *with certainty* where _the market will be in 7 days_. Anybody making that promise, regardless on what basis, is a charlatan. The best a good T/A approach can give you is a set of different probabilities for a set of possible outcomes. A reliable system is based on Statistics, a branch of the science Mathematics. Based on past trading, Statistical Analysis can provide information on the likelihood of -

continuation of current trend,
reversal of current trend, and
possible price targets of support and resistance
Due to the statistical nature of this approach, you will need to analyse the results over a sufficiently large number of trades and compare outcomes of different methods - including random or "dartboard" decisions - under the rules of Statistics. Follow the one that gives you - in the long run - the best outcome, but never swap methods because a single trade went sour because it took off in the direction of lesser probability.


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## professor_frink (21 November 2010)

*Re: Tech Analysis - Smoke & Mirrors?*



dragon8 said:


> I am a newbie to tech analysis and have only studied it for a couple of months.
> I would appreciate comments from forum users as to the success or otherwise they have had with tech analysis.  Sometimes I wonder if shapes on a chart become a self fulling prophecy such as when people see a head and shoulders and react accordingly.  There seem to be so many theories on charting that if one theory does not fit simply use another to explain away the one that did not fit.  I have yet to find one which will tell me where the market will be in 7 days but there a plently which will explain after the fact why the past share market action had occurred.  It almost seems that if one theory does not fit into the slot simply pick another which will, voila they say it goes to show it works.  I think not. I want to believe but it seems to be like my baby daughter playing with her shapes toy trying to fit a star into a round hole.  Eventually she gets one to work.




I agree a lot of it is pretty well useless. 

In regards to where the market will be in 7 days time, no form of analysis will tell you that. Nothing is perfect.

Having said that I do trade using charts and have support and resistance levels and some moving averages on it. Every now and then I make enough money to buy a sack of goon and some 2 minute noodles, which makes me happy, so I guess you could say that considering my trading activities make me happy, that I am successful


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## dragon8 (21 November 2010)

In regard to odds and trends I guess it is similar to how I bet at the casino on red or black.  Wait for a series of reds to come up then bet black with the law of averages being that a black is likely after say a series of 5 reds.
Unfortunately I have done this and 13 reds have come up in a row. Ouch!!

Is using TA really increasing your chances of a better than 50/50 bet? or would the price movement have happened anyhow.


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## dragon8 (21 November 2010)

Is using TA therefore really only appropropiate for an indication of the next days trading as looking further forward has too may variables?


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## Wysiwyg (21 November 2010)

dragon8 said:


> Unfortunately I have done this and 13 reds have come up in a row. Ouch!!




That is like counter-trend trading. Betting the share price will reverse after for example a 100% share price increase. 

Again, it is only after you placed your bet that the result was 13 in a row. The next result would probably be different. Plot that strategy 1000 times and you would have an equity curve showing profitable or not profitable in the longer term. That is testing a strategy for longer term results.


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## captain black (21 November 2010)

dragon8 said:


> In regard to odds and trends I guess it is similar to how I bet at the casino on red or black.  Wait for a series of reds to come up then bet black with the law of averages being that a black is likely after say a series of 5 reds.




http://en.wikipedia.org/wiki/Gambler%27s_fallacy


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## Wysiwyg (21 November 2010)

dragon8 said:


> Is using TA therefore really only appropropiate for an indication of the next days trading as looking further forward has too may variables?



I use Amibroker to test strategies using historical prices. The results, although not 100% accurate, are either profitable or not for the tested historical prices. A hint I will give you is that the position size and exit are more important than the entry. That is cut the losers and let the winners ride. These concepts need to be understood and practiced.


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## Wysiwyg (21 November 2010)

Here is an example of Technical Analysis from July this year. Analysis projecting the ASX200 to be around 2700 by first half next year (2011). Another traders analysis would be completely different and THAT is why T.A. should be taken with a grain of salt. T.A.  is simply an interpretation based on experience and (LOL) agenda.


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## pixel (21 November 2010)

dragon8 said:


> In regard to odds and trends I guess it is similar to how I bet at the casino on red or black.  Wait for a series of reds to come up then bet black with the law of averages being that a black is likely after say a series of 5 reds.
> Unfortunately I have done this and 13 reds have come up in a row. Ouch!!
> 
> Is using TA really increasing your chances of a better than 50/50 bet? or would the price movement have happened anyhow.




Hi Dragon;
what you describe is precisely the fallacy that non-technicians fall into. Even after 50 times Red, the odds for the next 50:50 bet are exactly the same, 50:50! Nothng you do can and will improve the odds for you, no matter what some non-Mathematicians may claim.

When I talk about an edge in picking the next move, I am talking price momentum, which is NOT solely dependent on chance, but will follow certain laws of probability. These laws, properly applied, will work on any time scale, be it daily, weekly, monthly; *but you have to react to changes*.

PS: I notice Captain Black has already said essentially the same, in pure, indisputable Scientific terms. 
PPS: The same fallacy is exploited by promotors of Lotto numbers, who "sell" you tables, how often each number has been drawn, not drawn, or how long it's been since a number has come up last time. Those lists and their underlying "assumption" that a high frequency means it's favoured, or a long time since last drawn means it's due to come up soon, is just the same kind of bulls'***. But people buy the dream...


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## dragon8 (21 November 2010)

Thanks for everyones input.  Seems like most believe it is beneficial in some way.  I'll keep following this thread with interest and continue reading my next TA book from Amazon.  Just wanted to make sure I wasn't wasting my time and ensure that TA wasn't all hokus pokus and a waving of magical wands.


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## captain black (21 November 2010)

pixel said:


> PPS: The same fallacy is exploited by promotors of Lotto numbers, who "sell" you tables, how often each number has been drawn, not drawn, or how long it's been since a number has come up last time. Those lists and their underlying "assumption" that a high frequency means it's favoured, or a long time since last drawn means it's due to come up soon, is just the same kind of bulls'***. But people buy the dream...




Everybody wants the easy way out without understanding the mathematics of positive/negative expectancy. I've been trading full-time for quite a few years and still get called a "gambler". When I show people what I do with regards to system design in Amibroker etc. the most common response is "that looks too hard".

 My neighbour was an expert in designing systems for growing almonds, he devoted his (short) life to scientific testing of various methods of drip irrigation and fertigation to achieve maximum production. I ran him through the whole system design process for trading one day thinking he would be someone who would "get it". I got the same response... "gee, that looks complicated". A few months later he told me he'd invested all his savings in a mining company because he knew someone whose cousin worked as a secretary in the company. I was dumbfounded.


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## dragon8 (21 November 2010)

To Captain Black,

You've really done my head in with your link to "The Gambler's fallacy, also known as the Monte Carlo fallacy".  Now I'll have to also reavaluate my gambling methods.


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## captain black (21 November 2010)

dragon8 said:


> You've really done my head in with your link to "The Gambler's fallacy, also known as the Monte Carlo fallacy".








dragon8 said:


> Now I'll have to also reavaluate my gambling methods.




Google "Positive Expectancy" and have a good read.


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## wayneL (21 November 2010)

captain black said:


> Google "Positive Expectancy" and have a good read.



If there is such a thing as the Holy Grail, understanding positive expectancy is the path to achieving it. 

Nooooobs start reading about technical analysis and believe it is a way to predict the movement of stocks. Maybe there are some methods that increase the probability of predicting short term moves, but even these are worthless without understanding positive expectancy.

For me, t/a is about establishing boundaries, not predicting movement. That is taking so-called low risk entries and taking exits that give me the best chance of having larger wins than losses, in sufficient proportion to ensure long term profitability.

I can show you a system (using options) with a statistical 80% probability of winning. Yet this is useless if the 20% of losses are larger than the 80% of wins.

In short, technical analysis is just a tool one can use in an overall system of trading, but it isn't the whole picture.


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## tech/a (21 November 2010)

As with pretty well every discussion I see on any topic of analysis the *KEY* ingredient is missing in every thread.

*APPLICATION*

Any analysis on its own is not worth the paper its written on if it isn't applied
correctly.
Correct application will give you the opportunity of positive expectancy which as Wayne points out is an absolute must in getting to a consistent profit.

A very high % of those who use technical analysis have no idea (Or very little) in its application to trading.
If you don't know that Extreme High Volume often indicates weakness rather than strength in( for instance ) certain circumstances-----Learn what and when they are.

Then chances are your applying your Technical analysis incorrectly.

Some of the posts here clearly show that.

*AND*

If you are you dont have a Hope in Hell of constructing a positive expectancy 
Trading method.

Most analysis in the hands of an in experienced practitioner is next to useless.(50/50 would be an excellent outcome.)

So to is a Jumbo Jet in the hands of a Cessna pilot.

*APPLICATION*


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## robusta (21 November 2010)

tech/a said:


> As with pretty well every discussion I see on any topic of analysis the *KEY* ingredient is missing in every thread.
> 
> *APPLICATION*
> 
> ...




Make a man a fire, you keep him warm for a day. Set a man on fire, you keep him warm for the rest of his life. 
””Terry Pratchett


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## tech/a (21 November 2010)

> Set a man on fire,




He's dead!!!


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## Agentm (21 November 2010)

this is an interesting subject

i just posted up on the TXN thread a TA that was just posted in the past few hours by haspete on TXN..

anyway, its a nice 6 minutes long and goes into very good detail.

I have never invested on the basis of TA,,  i absolutely only invest on the back of my own detailed research, i always research the company and the management, if they come up to speed and there is a project in the pipeline that i feel is likely to be achieved, *then i invest for and outcome* 

i know txn is a share that will be re rated with the eagleford wells coming on and being producers. but i find the TA very interesting.. 

i dont follow how people can pick a bottom on a share that in a moment can announce a frac of a well and see a huge spike in its share price in a few hours..  

there was comment on this thread about how detailed TA needs to be to be effective, so how does this one rate in terms of detail?


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## So_Cynical (21 November 2010)

dragon8 said:


> In regard to odds and trends I guess it is similar to how I bet at the casino on red or black.  Wait for a series of reds to come up then bet black with the law of averages being that a black is likely after say a series of 5 reds.
> Unfortunately I have done this and 13 reds have come up in a row. Ouch!!
> 
> Is using TA really increasing your chances of a better than 50/50 bet? or would the price movement have happened anyhow.




You have it ass about...the trick to casino games like roulette and two up etc is to follow the run of consecutive's, not bet against it....when it comes to the stock market betting on consecutive's is called trend following and can be a very successful strategy.



pixel said:


> what you describe is precisely the fallacy that non-technicians fall into. Even after 50 times Red, the odds for the next 50:50 bet are exactly the same, 50:50! Nothng you do can and will improve the odds for you, no matter what some non-Mathematicians may claim.




The odds for any single 50:50 event are always the same....the odds however for a event of 50 x 50:50 events are totally different....the odds for 51 reds in a row is millions to one.


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## captain black (21 November 2010)

So_Cynical said:


> You have it ass about...the trick to casino games like roulette and two up etc is to follow the run of consecutive's, not bet against it....




http://en.wikipedia.org/wiki/Gambler's_fallacy



> The reversal is also a fallacy, the inverse gambler's fallacy,  in which a gambler may instead decide that tails are more likely out of  some mystical preconception that fate has thus far allowed for  consistent results of tails; the false conclusion being: Why change if  odds favor tails? Again, the fallacy is the belief that the "universe"  somehow carries a memory of past results which tend to favor or disfavor  future outcomes.


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## So_Cynical (21 November 2010)

captain black said:


> http://en.wikipedia.org/wiki/Gambler's_fallacy




Capt can i suggest you get an education in gambling...im constantly amazed at the amount of people on this forum that struggle with the basics of gambling.


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## captain black (21 November 2010)

So_Cynical said:


> ...im constantly amazed at the amount of people on this forum that struggle with the basics of gambling.




As am I......


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## tech/a (21 November 2010)

Agentm said:


> this is an interesting subject
> 
> i just posted up on the TXN thread a TA that was just posted in the past few hours by haspete on TXN..
> 
> ...






Very average Analysis I'm afraid.
Appears the more the merrier for this guy. (indicators)

Ignoring some very basic Support and resistance analysis.
In the end he has no conclusion and very little Idea of trade direction.
Some wishy washy could go here in this area OR there in that area.
Brilliant.---It COULD go up or down.

Here is some application for you.
If your holding this long still then your a goose.
If your thinking of going long then your goose's brother.
If you really have to take a trade then here are your short stops for aggressive and more conservative---There is a 3rd but you can pick it.

It aint that hard!
Can you *see the difference* between analysis and *APPLICATION* of analysis????


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## outback (22 November 2010)

tech/a said:


> ....snip....
> Here is some application for you.
> If your holding this long still then your a goose.
> If your thinking of going long then your goose's brother.
> ...






How about, back away, don't make eye contact, and try not to startle it, when cornered like this they can become very dangerous.


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## tech/a (22 November 2010)

outback said:


> How about, back away, don't make eye contact, and try not to startle it, when cornered like this they can become very dangerous.




Duck Season!


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## Agentm (22 November 2010)

tech/a said:


> Very average Analysis I'm afraid.
> Appears the more the merrier for this guy. (indicators)
> 
> Ignoring some very basic Support and resistance analysis.
> ...




thanks for that tech/a

i am in the category of goose.. as i know the valuation of the eagleford shale is yet to be factored into the share price.. the recent few announcements of a few weeks of delays has seen some exits, and a fall away in the support of the sp as the buyers keep pegging down and the sellers keep taking the price, imho the .35 cap raising a few months back contributes to the selling atm..  getting .60 in a matter of about 6 months or so is a pretty nice gain, and risk free, and perhaps running a bit of free carry into the future of a successful well in the eagleford shale is a nice reward for christmas..

for me i see the current prices as an opportunity to buy, and i have been, yet interestingly your seeing it as a red flag to sell.  but the volumes are real low on the share, and like the patterns with adi when they had delays, the share always shot up as soon as a positive news announcement was issued.. 

perhaps this is a case when a gooses investment for outcomes versus TA will be an interesting experiment.

lets look at this again in a month, revisit and see how the outcome of the share is.. my pick is the share will run into the 70's and 80's on any success in the eagleford. 

another goose investment i got into about 60 days ago was CDU,, if you pull up a TA on that one you would say when i bought it was a screaming red flag sell.. yet my own valuations suggested to me the share was a screaming buy.. since that purchase i have a 100% gain in 60 days.. investing as a goose is sometimes golden..honk..

cheers

the goose and the gooses brother.. honk.. lol


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## nioka (22 November 2010)

I'm another goose. My goose strategy is to look for stocks that the "technachists" say has a red flag and a screaming sell written all over it. However one that has fundamentals telling me that it is past events that have formed the chart patterns and that the future will not reflect the past.

Eg; ADI Multibagger, AUT Multibagger, EKA Multibagger, CER Multibagger, LYC Multibagger, NTU Multibagger, SDL Multibagger. These have made a tidy amount which exceeds those that showed a loss by a ratio of 20 to 1.

Even those that show a loss now and that loss is small, still have the potential to bloom. Stocks like EDE, BUL, TAS and VPE which I hold in fair number at about breakeven point still have the potential to make me a quid or two in the next year or so would not be on the chartist list to buy. Actually when they get there it will probably be the time to watch for a profitable exit strategy and pluck the fat goose.


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## $20shoes (22 November 2010)

Agentm said:


> thanks for that tech/a
> 
> perhaps this is a case when a gooses investment for outcomes versus TA will be an interesting experiment.
> 
> ...




This is interesting - the more it falls the more value you see. That is,  you have in your mind an informed view of what constitutes a fair price  and you are willing to get in at lower prices while there is weakness. 

I don't want to be cute about this because you've been around the blocks  a few times, but at what point does weakness exhibit too much weakness? Actually, what I'm trying to get at, is not how you trade per  se', but what is your thought process as you're potentially down 15 or 20% and  hoping for the rebound. Do you cut your losses or do you have an unshakeable belief that you have beaten the market and prices will inveriably go up if I'm patient? 

To me it sounds like you're locked into an informed idea  of what is fair value and contrary to market action you will buy lower  and hope for higher. No disrespect but I don;t have the risk appetite to play that game. 


With T/A you wouldn't be locked into holding a thought process like  this. Even with TXN, you might see supply dry up at 51c  and then see a confirming bar of buying volume and immediately look at going long. So potentially, the application of T/A wouldn't preclude Tech from entering long as the landscape changes ( though it is ugly at 60-65c). That is, you trade what the market gives you. 

The application of TA should be about following price action in your time frame. 

The application of FA seems to be finding value in your timeframe. 

...and never the twain shall meet :


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## nioka (22 November 2010)

$20shoes said:


> , but what is your thought process as you're potentially down 15 or 20% and  hoping for the rebound. Do you cut your losses or do you have an unshakeable belief that you have beaten the market and prices will inveriably go up if I'm patient?
> 
> To me it sounds like you're locked into an informed idea  of what is fair value and contrary to market action you will buy lower  and hope for higher. No disrespect but I don;t have the risk appetite to play that game. :




I don't want to reply for Agent but my thoughts are:

Each day I assess my investments. If the fundamentals say they are good value TO ME at the current price then I hold long term. I decide if the current trading in the particular stock offers an opportunity to trde some for accumulating "freebies" then I may trade. I never EXIT a stock on techicnals, only on fundamentals. 

I never use a stop loss facility.Had I done this I would never had had the success I have had with investing.


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## Agentm (22 November 2010)

$20shoes said:


> This is interesting - the more it falls the more value you see. That is,  you have in your mind an informed view of what constitutes a fair price  and you are willing to get in at lower prices while there is weakness.
> 
> I don't want to be cute about this because you've been around the blocks  a few times, but at what point does weakness exhibit too much weakness? Actually, what I'm trying to get at, is not how you trade per  se', but what is your thought process as you're potentially down 15 or 20% and  hoping for the rebound. Do you cut your losses or do you have an unshakeable belief that you have beaten the market and prices will inveriably go up if I'm patient?
> 
> ...




its simple really, i am not a chartist.

simply look at a share and research it hard. i look at management first, then if hey qualify, then i look at the play or resource, or the plan ahead..

with adi it went from .12 to $1 and all the way to .06  ..  many sold, and to me as well.. so at .06 i averaged up..  if you ask nursery here, you will learn how he increased his holdings by selling between the 3 shares involved in the same oil play, adi, eka and aut.. he did amazingly well out of it as the share price plummeted throughout the gfc

i averaged down, as people sold to me at .06,  i had the ability to make some substantial gains.. my eventual exit was .40 ish

cdu a few weeks back were $2.. today $4  i have been following cdu since it was $10.. happily went there when i gather the charts said sell..

also into vpe like nursery, and i am very much in front..

for me its about the story in the research, whats about to happen next..  where the value comes from in the share itself.

is it too simplistic to say that the average TA trader has little or no clue what the company they are investing in actually does, or if that aspect of knowing actually matters or not?

right now i am buying TXN,, and the TA is saying sell..

as i said before, lets see if the valuation of the eagleford play will impact the share as i expect it will..  lets revisit in a month..

my way is obviously the way of the goose,, but imho TA is the way of the sheep..

will my method of investing for an outcome prevail?  i hope so.. having a substantial holding in PLA from .11 to $3 was an enjoyment in research.. how hard can it be?


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## tech/a (22 November 2010)

My opinion is based upon the chart as seen on Sunday night.

The chart may well in the future alter my view and be one in sync with others here.

But until that happens I'm not interested in joining the flock of geese.


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## professor_frink (22 November 2010)

Agentm said:


> my way is obviously the way of the goose,, but imho TA is the way of the sheep..




Looking at the analysis video you posted earlier, I can see why you would come to that conclusion.

Not all TA traders are like that though


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## tech/a (22 November 2010)

Strange as it may seem I am in agreeance with the majority of posters on the topic.

By far the larger majority of technical analysis *CAN* be viewed by both the initiated and those not versed---as contradictory at times and complete mumbo at others.
Take the Video presented!!!
Much is hindsite analysis which while it has a place certainly has no value as a stand alone analytic tool.

What it can do if applied correctly is tell you very clearly when to join the rest of the animals (Geese/Sheep etc) and when to leave or completely ignore them.


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## pixel (22 November 2010)

Agentm said:


> its simple really, i am not a chartist.
> 
> ...
> 
> right now i am buying TXN,, and the TA is saying sell..




Hi Agentm,
Your first statement is obviously true, just as your claim that TA says sell TXN is obviously wrong.

The TXN chart shows flag consolidation after a very nice rally in September. The doji at resistance on October 27th would have suggested to get out, and the trailing stop - a technical calculation I use - confirmed it on November 1st.
Meanwhile, however, support has been found, and even though the volume is still low, I'd put TXN back on my shopping list, waiting for -

rising volume at or near the support level
red MACD line rising above zero
break above the middle of the channel
daily Close Above 58c
whichever comes first.


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## Sir Osisofliver (22 November 2010)

dragon8 said:


> I am a newbie to tech analysis and have only studied it for a couple of months.
> I would appreciate comments from forum users as to the success or otherwise they have had with tech analysis.  Sometimes I wonder if shapes on a chart become a self fulling prophecy such as when people see a head and shoulders and react accordingly.  There seem to be so many theories on charting that if one theory does not fit simply use another to explain away the one that did not fit.  I have yet to find one which will tell me where the market will be in 7 days but there a plently which will explain after the fact why the past share market action had occurred.  It almost seems that if one theory does not fit into the slot simply pick another which will, voila they say it goes to show it works.  I think not. I want to believe but it seems to be like my baby daughter playing with her shapes toy trying to fit a star into a round hole.  Eventually she gets one to work.




Hi Dragon8,

Ahh Technical Analysis a most misunderstood creature. To answer your question simply...I find great value in Technical Analysis. This doesn't answer the question however of ..... does technical analysis have any value *to you.* 

I've come to the conclusion after many years that technical analysis is not for everyone. It is a very complex topic and some people are simply not suited to it. I'm not trying to sound elitist or up myself or that I have nothing left to learn here, merely that certain factors can mean that technical analysis, is much harder for some people than others. Let me elaborate...

How you learn is determined by the way in which your brain prefers to receive its inputs. Everyone takes in information through their senses, but everyone generally has one sense that they prefer. This sense is the one that your brain has been trained over your lifetime to respond to in the most efficient manner. You may be visually orientated - Like to watch things, auditory orientated - like to hear things, or Kinesthic - like to do things. Depending on which one you are will influence your ability to use and understand TA. If you are a Kinesthetic the best way for you to learn is to actually do something. Reading all the textbooks and watching others will have little value to you until you actually do it yourself. Which in trading can be dangerous if you don't know what you are doing.

Your personality type and attitude towards risk will also determine how suited you are to technical analysis. I know we are all unique and special snowflakes, but the BB & K five way model will help you here....

Currently one of the more sophisticated models in use, the BB & K five way model stresses the emotional confidence of an investor; and their preferred method of action or how they typically respond.   The level of confidence is determined by a number of emotional choices made based on how much an investor is concerned about a certain course of action or decision. Investors range from confident to anxious. The method of action is a reflection of how meticulous an investor is, as well as how analytical and intuitive they are. This ranges from careful to impetuous.
Within these two ranges, the model defines five personalities: 
*adventurers* - confident and strong-willed  investors who are ready to take chances; 
*celebrities* - those who feel the need to be in the middle of things and don't like to be left out. They may frequently check whether they should be in the latest fashionable investment but may not really have any clue as to how to take control of their finances;
*individualists* - confident individuals who make their own decisions but who are methodical, careful, balanced and analytical;
*guardians* - investors, often older ones, who are cautious and intent on safeguarding their wealth;
*straight arrows* – the average investor who doesn't fall into any of the extremes of the above categories. They tend to be somewhat balanced in their investment approach and willing to take on moderate risk.

And now we get to the market itself, and the representation of the market through data. How we interpret the data will be a function of our personality and past experience.

Ask yourself this question. Is the market Chaotic? If the answer is yes, like it is for me, you may wish to consider looking at chaotic math. There are a number of technical indicators that are based on chaotic math. The problem however that this is still an emergent field of study. We are attempting to analyze a complex chaotic data stream with imperfect tools at our disposal. In much the same way that the meteorologists cannot _perfectly_ predict the weather, current forms of technical analysis cannot perfectly predict the market...like the weather there are too many variables. So why do we do it?  The toolkits that we do have enable us to increase our probability of success, just like the meteorologists when predicting weather patterns. 

Hope that helps you see the bigger picture Dragon8

Cheers

Sir O


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## tech/a (22 November 2010)

Sir Osisofliver said:


> Hi Dragon8,
> 
> Ahh Technical Analysis a most misunderstood creature. To answer your question simply...I find great value in Technical Analysis. This doesn't answer the question however of ..... does technical analysis have any value *to you.*
> 
> ...




Interesting.
Are you suggesting that when trading we should ---- if we are risk tolerant
less strict with our risk control? That we can and even should take riskier positions? I find it rather strange and disturbing that it maybe seen that those who take on more risk are likely to benefit more.(not that you've said that).
I'm of the view that taking on more risk is not a fast track to more profit.




> And now we get to the market itself, and the representation of the market through data. How we interpret the data will be a function of our personality and past experience.




An interesting observation.
Your implying that emotion through experience plays a great part. It may.
But it shouldn't!



> Ask yourself this question. Is the market Chaotic? If the answer is yes, like it is for me, you may wish to consider looking at chaotic math. There are a number of technical indicators that are based on chaotic math. The problem however that this is still an emergent field of study. We are attempting to analyze a complex chaotic data stream with imperfect tools at our disposal. In much the same way that the meteorologists cannot _perfectly_ predict the weather, current forms of technical analysis cannot perfectly predict the market...like the weather there are too many variables. So why do we do it?  The toolkits that we do have enable us to increase our probability of success, just like the meteorologists when predicting weather patterns.
> 
> Hope that helps you see the bigger picture Dragon8
> 
> ...




I see this as being the greatest stumbling block for technical traders.
The frustration and disillusionment when they find their analysis doesn't pan out as planned.
When in actual fact if applied correctly it doesn't matter one bit.It will be just as anticipated as the analysis moving positively.
If you understand the way Elliot works and how to apply a trading method to Elliot then I'm sure you will understand the application of all analysis.

All you need do then is Apply it correctly.



> rising volume at or near the support level
> red MACD line rising above zero
> break above the middle of the channel
> daily Close Above 58c




I wish to ask some questions relative to this analysis---I do not wish to detract from it or suggest it is not accurate or relevant.I do think like the other analysis it does need to be discussed.
Particularly on application.

(1) How can you tell rising volume is positive to the share price? Even if the price goes up (initially)

(2) Why would the red line (3 day ema) rise above zero? Price would have to move positively above the 3 day ema.

(3) Why is a break above the middle of the channel significant--is not the top or bottom of the channel just as if not more significant?

(4) daily close above 58c---why not 54/55/56/57/60/61 etc?

Why would 1 of these have you immediately buying?
What is it you expect from any one of these happening?


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## Sir Osisofliver (23 November 2010)

tech/a said:


> Interesting.
> Are you suggesting that when trading we should ---- if we are risk tolerant
> less strict with our risk control? That we can and even should take riskier positions? I find it rather strange and disturbing that it maybe seen that those who take on more risk are likely to benefit more.(not that you've said that).
> I'm of the view that taking on more risk is not a fast track to more profit.



 Hell no! I would totally agree that taking on more risk is not conducive to better trading. BUT I believe there is a right way to trade *for me* based upon how I take in information and my personality type. The same is true for everyone. Remember Trembling Hands thread about placing a hedge against a self-built stock index? TH is a successful trader in his own right, but his methodology of _I think I have a fair idea how this will play out so I'm just gonna try it_ completely did my head in. He's a Kinesthetic, you can tell from the language he uses on these boards. I have a strong Aural focus which means I am "detail orientated" IE Anal retentive and to do what he did without running numbers is sheer lunacy!!!!! LUNACY I tell you. In that circumstance I would have said TH was taking on way to much risk...was it? That's only a question that he can answer. Does that make it clearer?







> An interesting observation.
> Your implying that emotion through experience plays a great part. It may.
> But it shouldn't!



 Once again we agree, with a slight difference. It DOES have an effect, if you let it. The negative feedback mechanism is a very well understood one. Ow that hurt, I won't do that again. That has helped our species to evolve, so those feedback mechanisms are literally hard-wired into our brain. IMO only by using a system or strategy that removes emotion from the decision making, do we eliminate this as a factor from our trading....but some people *hate* system trading.







> I see this as being the greatest stumbling block for technical traders.
> The frustration and disillusionment when they find their analysis doesn't pan out as planned.
> When in actual fact if applied correctly it doesn't matter one bit.It will be just as anticipated as the analysis moving positively.
> If you understand the way Elliot works and how to apply a trading method to Elliot then I'm sure you will understand the application of all analysis.
> ...




Yes once again we find ourselves in agreement, but I also think that those that use Fundamental Analysis because they understand it better delude themselves that it is more robust than TA. Anyone who thinks that FA doesn't have an equal amount of subjectivity to it needs to look closer at their methodology.

Cheers

 Sir O


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## tech/a (23 November 2010)

Sir O

Can only say


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## Sir Osisofliver (23 November 2010)

LOL - thanks Tech/A that made me chuckle - and considering I'm still at my desk I need the diversion.

Cheers

 Sir O


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## Trembling Hand (23 November 2010)

Sir Osisofliver said:


> Hell no! I would totally agree that taking on more risk is not conducive to better trading. BUT I believe there is a right way to trade *for me* based upon how I take in information and my personality type. The same is true for everyone. Remember Trembling Hands thread about placing a hedge against a self-built stock index? TH is a successful trader in his own right, but his methodology of _I think I have a fair idea how this will play out so I'm just gonna try it_ completely did my head in. He's a Kinesthetic, you can tell from the language he uses on these boards.




Makes you wonder how well you can listen to your "clients" Sir O rather than just jumping to conclusions.

Let me state it again for the 100th time. *Maybe you will LISTEN this time.* *I have very long history of back testing that idea and forward testing it. But although profitable it NEVER got anywhere close to being as profitable as using it on a discretionary basis.* Thats why I'm a discretionary trader. Nothing comes close to providing me with the $$s. Which one do you want me to use??


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## Trembling Hand (23 November 2010)

Sir Osisofliver said:


> It DOES have an effect, if you let it. The negative feedback mechanism is a very well understood one. Ow that hurt, I won't do that again. That has helped our species to evolve, so those feedback mechanisms are literally hard-wired into our brain. IMO only by using a system or strategy that removes emotion from the decision making, do we eliminate this as a factor from our trading....but some people *hate* system trading.




You have way way way over simplified emotion responses to fit your idea of "non emotional" trading. Especially a negative emotional response.


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## Sir Osisofliver (24 November 2010)

Trembling Hand said:


> Makes you wonder how well you can listen to your "clients" Sir O rather than just jumping to conclusions.
> 
> Let me state it again for the 100th time. *Maybe you will LISTEN this time.* *I have very long history of back testing that idea and forward testing it. But although profitable it NEVER got anywhere close to being as profitable as using it on a discretionary basis.* Thats why I'm a discretionary trader. Nothing comes close to providing me with the $$s. Which one do you want me to use??




TH - It was late, I couldn't be stuffed looking up the thread for perfect accuracy and I paraphrased. As I said... I can't do discretionary trading. It does my head in. You can. Congratulations. I in no way attempted to say that you were a bad trader. I was merely looking to clarify an issue around different personalities by using you as an example. I in no way attempted to degrade you or your methodology and if I offended you I sincerely apologise. I do not however like the hostility I read in your post. Don't worry I will never use you as an example for clarification purposes again.



Trembling Hand said:


> You have way way way over simplified emotion responses to fit your idea of "non emotional" trading. Especially a negative emotional response.




Duh? Of course I oversimplified. It's a complex topic involving those chaotic creatures, human beings. Millions of words have been written about it by people with impressive letters after their names and Doctorates on psychology and Nobel prizes. But funnily enough we happen to be in the *Beginners Forum*. Perhaps this isn't the place to write a book about Behavioural Economics and Investor Psychology but instead gently point out a few things to encourage them to do their own research.

Cheers

Sir O


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## tech/a (24 November 2010)

> As I said... I can't do discretionary trading. It does my head in.




I actually enjoy both systems and discretionary trading.

**Once you've tested enough ideas over enough data it is pretty obvious you simply need to tilt the number of wins or the return of wins in your favor to be profitable just as you do with Systems trading---with the added advantage of being very agressive in your approach both in minimising risk and maximising return (Normally using postion sizing) --- being able to pounce when you can see the train!-----and get off while others are boarding it!.

What I have found is smoothness of curve is for me at least best achieved with System trading.
Discretionary trading is like looking for a train line and standing on one that looks like the train is going to fly and hit you any minute---and waiting to get hit!

I have some spectacular wins and some prolonged bleeding the curve (Overall) jumps most when this form of trading is included in the mix.

Provided you understand **


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## ugotdan (24 November 2010)

I believe, just with economic analysis, if you can use a broad range of indicators from the entire "toolshop" and have a majority line up, then a trade may be born. TA + FA + Economic Analysis....
Everyone is biased in their own way, should we not be more inclined to continually study new techniques?
TA indicators are another form of model of the real world. choose your inputs carefully - As Natenberg said, "Garbage in = Garbage out".


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## tech/a (24 November 2010)

> if you can *use a broad range of indicators *from the entire "toolshop" and have a majority line up, then a trade may be born.




Another *common misconception *with regard to "Use" of indicators.
EVERY indicator is a derivative of 
High
Low
Range
volume
Open 
Close
or open interest.

So most say the same/very similar as the next indicator.
Like Jumping in a Porche/Merc or BMW and driving to Sydney
They are all cars going to the same destination.Argueably any one being better than the other.
You only need one!


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## joea (13 January 2011)

Comments on Indicators.
In 2004 a 74 page guide was produced called "Charting Power Stocks".
It covered a number of Indicators, and showed how to use them.
A summary from the book is as follows...
Key Thought on Indicators.
1 Use trend following indicators to trade trends.
2 However , trend following indicators only give good results in strong sustained trends.
3 Use momentum oscillators to trade sideways.
4 Most trend following indicators lag behind the market.
5 No Indicator is perfect.
6 Because indicators are not infallible, it is important to look for confirmation of 
    signals from analysis of the price charts and perhaps another indicator.
7 Because indicators are not infallible, always know the failure points.
8 Indicators will never replace, or be a substitute for analysis of the price chart.
  Indicators are not an easy way to avoid studying what price charts can reveal about 
  the balance of supply and demand.

What has happened through technology is that to make it easy for beginners, indicators
that are termed "PROPRIETARY INDICATORS" are marketed to make it easy.
As far as I know these type of indicators are generally a combination of normal indicators.

Because there are different rules for a particular indicator in either a "sideways or trending"  market, new traders shoud be aware of that situation.
For instance the OS and OB levels of RSI in a trending market are different to those in a sideways market.

Cheers.


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## motorway (13 January 2011)

tech/a said:


> Another *common misconception *with regard to "Use" of indicators.
> EVERY indicator is a derivative of
> High
> Low
> ...




Here was a good pointer..

Any indicator is a non optimized lagging ( to some degree ) derivative
of the price action ( or Volume )

You can see what any MACD RSI AVERAGE would tell you by just looking at the structure of the price action

If you can't maybe you should not use the indicator at ALL

...
So what about indicators ( definition needed what is an indicator ?  Maybe a Trendline for example is NOT  though it can give indications.... )

Maybe OK to scan for Situations etc ( maybe OK )

Make some quantified definitions to work from

etc

Indicators to me have a non optimized look back period
That is non optimized to the action it is going to be applied to ( the future )

Some things imo do not have such failings at least to the same degree


Motorway


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## tech/a (13 January 2011)

> For instance the OS and OB levels of RSI in a trending market are different to those in a sideways market.





No there not!!

The use of the indicator is though!


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## nukz (13 January 2011)

Tech analysis i believe has some validity but what to often happens is unforseen events alter markets perceptions. I find people also develop market bias's that can alter market conditions(Soros talks allot about this in his book "Alchemy of finance").

I have a few friends who swear by Gann theory but when i used it i was not convinced, i ushally prefer to just use fundamentals. Ie. Floods in a state that is a massive coal exporter to China and that very coal is normally transported by rail which is now underwater.. i would look at shorting rail transport companys, you could also look at going long on coal prices as supply/demand 101. 

I believe Buffet has publiclly states that tech analysis is useless(but coming from a buy and holder it may be useless).


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## motorway (13 January 2011)

nukz said:


> Tech analysis i believe has some validity but what to often happens is unforseen events alter markets perceptions. I find people also develop market bias's that can alter market conditions(Soros talks allot about this in his book "Alchemy of finance").
> 
> I have a few friends who swear by Gann theory but when i used it i was not convinced, i ushally prefer to just use fundamentals. Ie. Floods in a state that is a massive coal exporter to China and that very coal that is normally transported by rail which is underwater.. i would look at shorting rail transport companys, you could also look at going long on coal prices as supply/demand 101.
> 
> I believe Buffet has publiclly states that tech analysis is useless(but coming from a buy and holder it may be useless).




Everyone has their Biases==>

If Mr market was a real person and went to a doctor
Would a chart of his pertinent medical history , a chart of his pathology be useful ?
swings in hormones Blood Pressure ,, circadian rhythms ?

Would such TA be useful ? eg is he really depressed right now !

A bias many have no matter what their methods and tools
Is to expect too Much from them... and underestimate the value of other tools one as decided are of No VALUE...



"*Looks Random, Seems Random, So It Must Be Random?
*
The rational school of economists who postulated efficient markets assumed stock prices were random. Harry C. Roberts presented one of the earliest renderings of randomness in stocks in 1959. Of course the simplest way to prove randomness in stocks is to discredit anyone who postulates patterns in stocks. 

The unlucky "patternists" in this case were the technical analysts ,Roberts's paper compared real stock prices with what we might call virtual stock prices. His virtual graphs were constructed of data obtained from a random number generator. The original graphs are reproduced in diagram 10-2. His assertion, or perhaps his assumption, is that because the real and the virtual stock chart have the "same visual appearance," stock prices are random.

" The graph seems to show a pattern, but in fact a pattern does not exist." 

This may be a dubious logic. 


After all, if you showed a physician an EKG graph generated from random numbers and he gave you a diagnosis, does it prove that the patterns in all the real EKG data are random or did you just put one over on the good doctor? 

Could it be that the cognitive error is on the part of those who are culturally biased against patterns whether in technical analysis, chaos, or whatever.



The Challenge of Chartism

Price charts only tell us what we think they tell us. Our bias interferes with the potential for an objective perception of a given price history. We see only what we have been taught to see.

 One may say the same thing about fundamentals. Fundamentals are perceptual, too. The terrible news of the bankruptcy of WorldCom and generally failing communications companies were negative fundamentals for the telecom sector. Yet, some would say that these bankruptcies have finally created value in telecom shares, which had been overvalued for years.

 The return to realism and the reduction of expectations to reasonable growth may actually provide the best fundamentals in years. Who sees what? Those with a perpetually bullish bias are victims of the adage that beauty is in the eye of the buy-and-holder.

Woody Dorsey"


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## joea (13 January 2011)

tech/a said:


> No there not!!
> 
> The use of the indicator is though!




yes they are, if you use the two levels as the original concept. 

downtrend 60 :20, sideways 70:30 and 80:40 for uptrend.
That gives the best fit to touch the lines.
The lines need to be biased unless the period changed.
Just needs a fiddle.

But it is good you commented.

We have  back testers on the forum. it would be good if we could get an indicator and combine all that it could cover and see if it will perform as a reliable stand alone system..
Say DMI.
Just a thought.

Cheers


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## tech/a (13 January 2011)

Can test anything you want but will guarantee you *NOT ONE* will return a profit as a stand alone Indicator.

One of the reasons I Dont use them in discretionary trading at all and only limited in Systems trading.


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## It's Snake Pliskin (13 January 2011)

tech/a said:


> Can test anything you want but will guarantee you *NOT ONE* will return a profit as a stand alone Indicator.
> 
> One of the reasons I Dont use them in discretionary trading at all and only limited in Systems trading.



I was hoping to make millions with the MACD 

Seriously, can testing really give what a sea captain can give to his voyage?


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## ginar (13 January 2011)

tech/a said:


> Can test anything you want but will guarantee you *NOT ONE* will return a profit as a stand alone Indicator.
> 
> One of the reasons I Dont use them in discretionary trading at all and only limited in Systems trading.




Whilst im not a fan of indicators i'm * NOT* silly enough to make a statement like that . whats the guarantee and whats on offer if said guarantee is claimed upon ?


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## tech/a (13 January 2011)

I'll put up $500 to support Joe if anyone can find me a Single Indicator which shows a profit better than Buy and hold over a period of 2 yrs over the XAO.(any 2 yrs)

In fact I doubt you could get one over the XJO.

I reserve the right to test it on my software if you find it.

Ever read "The Encyclopedia of Technical Indicators"?
100s of them not one out performed.

If Proven wrong Joe gets $500

Now I lost to Sir O once so happy to lose again.


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## Boggo (13 January 2011)

ginar said:


> Whilst im not a fan of indicators i'm * NOT* silly enough to make a statement like that . whats the guarantee and whats on offer if said guarantee is claimed upon ?




I have spent ages testing all sorts of indicators and many times thought that I had found the holy grail only to have each one fail dismally on its own.

I personally am convinced that it is much more important a pattern and a set of associated conditions that can be tested both in theory and in practice with real money.

The problem I found was how do I locate these "this is a heads up" patterns on both a daily and weekly basis from a list of over 1900 stocks.

My solution was to find the patterns that I want and then work backwards and analyse the indicators that were associated with that pattern and then come up with a set of indicators where together they would find the patterns that I wanted.

Get the indicators qualified (adjusted) to work together just like a company (tech/a ?) would get its employees, all with slightly different talents, working together to achieve a predetermined outcome.

I never look at the indicators, they are in the background in my scan formula, I only need to see their results after each scan.
I have also found that if any scan is producing results of more than 5% of the total group you are scanning then you need to restrict the conditions associated with the scan to narrow the field.

The first chart below is and example of a result (ASL) where my scan found my "heads up" arrow.

The second chart is just a simple Turtle breakout but I already knew that it may be coming thanks to my employees working together.

That is my 

(click to expand)


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## tech/a (13 January 2011)

Boggo

They are all momentum based all telling you the same thing.

Like asking the same question to
Paul
Mark
David
Eric

You'll get the same answer but the one giving it to you will be a little different from the next.

But for God's sake Dont ask Mary as she's a female and you'll be there all day!


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## Boggo (13 January 2011)

tech/a said:


> Boggo
> 
> They are all momentum based all telling you the same thing.




Yes they are and from that piccy of ASL I would initially say the same.

In the highlighted area where they are all telling me approximately the same there is also a chart pattern and a few other parameters that at a point provide a heads up.

In reality what the indicators do is remove or disable the potential signal unless a combination of conditions are met.

Yeah, I know what you are thinking and I know I will never change your view of indicators in any form but in this form work well, very well actually at picking up impending breakouts for the eyeball test.


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## ginar (14 January 2011)

tech/a said:


> I'll put up $500 to support Joe if anyone can find me a Single Indicator which shows a profit better than Buy and hold over a period of 2 yrs over the XAO.(any 2 yrs)
> 
> In fact I doubt you could get one over the XJO.
> 
> ...




XAO not tradable and XJO flawed data with opens same as previous days close according to the data . im pretty busy atm with things qld atm but i will get back to this at a later stage . yeah ive read all the books , by the way your original statement said profitable without any caveats , i'll work on it when i can and get back to you .


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## joea (14 January 2011)

tech/a said:


> Can test anything you want but will guarantee you *NOT ONE* will return a profit as a stand alone Indicator.
> 
> One of the reasons I Dont use them in discretionary trading at all and only limited in Systems trading.




Hi Tech/a
I think I will have to clarify myself a little.
I agree with you on having more than one.

However, I was attempting to clarify that new traders will trial a indicator and they may conclude if it works or not. However they may not have all the little rules that are available to the indicator in the document covering  the indicator.

Example. In Acheliss " Technical Analysis from  A- Z " he has 22 lines of interpretation and  one graph. Of DMI.
In " Charting Power Stocks" there are 5, A4 pages of description and understanding, 5 charts and two diagrams.
In addition it gives the pitfalls of a sideways market and three additional rules to help reduce losses in this type of market.
Basically for people to understand a single indicator, they will probably need to visit more than one site.
I do realise that DMI is a complex indicator.

Finally if Williams%R can be used to convert $10,000 into >$1million in a 52 weeks competition. Then the fellow can teach his daughter to do a similar thing, I would think 
he would understand that indicator much more than the average trader.

I just think the new traders have that much to choose from, they spend an enormous
ammount of time trying everything before finally settling on a method.
Maybe the "KISS"  principle is the way to go.

Finally I think " Trading is not about making money-money will flow from good trading".

Cheers .


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## tech/a (14 January 2011)

ginar said:


> XAO not tradable and XJO flawed data with opens same as previous days close according to the data . im pretty busy atm with things qld atm but i will get back to this at a later stage . yeah ive read all the books , by the way your original statement said profitable without any caveats , i'll work on it when i can and get back to you .




Constituents of the XAO NOT the XAO chart itself.
Constituents of the XJO NOT the XJO chart itself.

No caveats just a realistic time period and data set of course I wish to check it.




joea said:


> Hi Tech/a
> I think I will have to clarify myself a little.
> I agree with you on having more than one.




I certainly DONT mean 2 oscillators are better!



> However, I was attempting to clarify that new traders will trial a indicator and they may conclude if it works or not. However they may not have all the little rules that are available to the indicator in the document covering  the indicator.
> 
> Example. In Acheliss " Technical Analysis from  A- Z " he has 22 lines of interpretation and  one graph. Of DMI.
> In " Charting Power Stocks" there are 5, A4 pages of description and understanding, 5 charts and two diagrams.
> ...




Its only complex as there are various interpretations to ATTEMPT to make it FIT where it fails!



> Finally if Williams%R can be used to convert $10,000 into >$1million in a 52 weeks competition. Then the fellow can teach his daughter to do a similar thing, I would think
> he would understand that indicator much more than the average trader.




You honestly think Williams uses one indicator.
Williams was lucky enough to get onto a futures move that gave that return.
I note he nor his daughter have been able to duplicate it. Sure the developer will have a better understanding of what they developed but if youve read Williams Indicators and Oscillators fill pages in books not 000,000's in bank accounts.
His OOPS pattern---now that is practical.



> I just think the new traders have that much to choose from, they spend an enormous
> ammount of time trying everything before finally settling on a method.
> Maybe the "KISS"  principle is the way to go.




22 ways of interpreting one indicator---SIMPLE?
Hell I look at a single bar and can make an instant decision---even if its to do nothing



> Finally I think " Trading is not about making money-money will flow from good trading".
> 
> Cheers .




So WHAT IS* good *trading?


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## joea (14 January 2011)

Because I know that is a trick question, my answer is "what you do".
Because I think that is the only correct one you will accept.
But I say  this with humor, not a "hidden agenda".
Joe


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## tech/a (14 January 2011)

joea said:


> Because I know that is a trick question, my answer is "what you do".
> Because I think that is the only correct one you will accept.
> But I say  this with humor, not a "hidden agenda".
> Joe




I'm not that devious.

Good trading is profitable trading.

We all know you wont get it (Profitable trading) without Positive expectancy and we *should* know that the best chance of acheiving that is to test what your doing and see if over time it produces a positive expectancy.-----Most (90%) dont do this and most of them fail.

These are the Discretionary traders Fundamental and/or Technical.

Very few of these guys survive let alone *KNOW* they are trading a profitable methodology---if they actually have a method!!!
If you read through most of the A,B,C threads they consist of opinion---nothing on Trading profitably.
Because to them getting on a trade which is a winner *IS* trading and sitting in a loser (because its undervalued and looking more attractive every day it tanks)* IS *trading-------to them---until they run out of capital---then they give up or actually LEARN.

Trade management is *never* discussed let alone *PORTFOLIO* management.

The Business of trading is rarely treated as a business and by most is treated like Gambling.
They dont have to Gamble---they just dont realise that.


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## joea (14 January 2011)

tech/a said:


> I'm not that devious.
> 
> Good trading is profitable trading.
> 
> ...




I agree.
Cheers


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## Gringotts Bank (15 January 2011)

tech/a said:


> I'll put up $500 to support Joe if anyone can find me a Single Indicator which shows a profit better than Buy and hold over a period of 2 yrs over the XAO.(any 2 yrs)





Any two years?  Easy.  A smoothed moving average applied to Jun 2008-Jun 2010.

If you loosen the parameters out, almost any indicator would be profitable during 2003-2007.

You're welcome Joe


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## tech/a (15 January 2011)

This is time wasting rubbish which doesnt help anyone.

*Constituents of the XAO NOT the XAO chart itself.
Constituents of the XJO NOT the XJO chart itself.*

You give me the parameters you want to run and the Indicator you want to run and Ill run the Tests for you.

I guess a 100 SMA would be your first choice run in say 2005-2007?


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## Boggo (15 January 2011)

These are the backtest results of my breakout system using the method described earlier in this thread.

*This cannot be done with a single indicator in my opinion.*

This is the ASX300 and it is based on the actual start date of 01/07/2003.

Top data is daily and bottom data is weekly and the bottom chart is daily $ value.

The end result difference in the final figure between both is almost the difference between the two lots of transaction costs.

(click to expand)


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## Gringotts Bank (15 January 2011)

Well if you want to go changing the rules after you start... 

I can get an out performance during that period with stocks where:

MA(v,5)*c>10,000,000  which is close to asx 200 stocks as I can get, since I don't have a separate category for that.

Just a simple MA cross, using JurikJMA, which you probably don't have.

Anyway, the results are:

+5%  versus Ords which returned -17%


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## Gringotts Bank (15 January 2011)

btw, that's long and short.  Or is that not allowed either?!!

I've changed something somewhere, now it's +1.6% vs -17%.



Ticker	Trade	Date	Price	Ex. date	Ex. Price	% chg	Profit	% Profit	Shares	Cum. Profit
TLS	Short	12/05/2008 12:00:00 PM	4.54	14/05/2008 12:00:00 PM	4.64	2.20%	-120.21	-2.40%	1101	-120.21
LGL	Short	13/05/2008 12:00:00 PM	2.96	15/05/2008 12:00:00 PM	3.01	1.69%	-94.48	-1.89%	1688	-214.68
QAN	Short	26/05/2008 12:00:00 PM	3.29	28/05/2008 12:00:00 PM	3.45	4.86%	-257.95	-5.07%	1547	-472.63
CMJ	Long	27/05/2008 12:00:00 PM	3.67	28/05/2008 12:00:00 PM	3.6	-1.91%	-93.96	-2.11%	1216	-566.59
MTS	Long	14/05/2008 12:00:00 PM	4.16	2/06/2008 12:00:00 PM	4.08	-1.92%	-106.24	-2.12%	1204	-672.83
MTS	Short	2/06/2008 12:00:00 PM	4.08	3/06/2008 12:00:00 PM	4.2	2.94%	-154.06	-3.14%	1201	-826.9
TLS	Long	14/05/2008 12:00:00 PM	4.64	10/06/2008 12:00:00 PM	4.55	-1.94%	-107.03	-2.14%	1079	-933.92
QAN	Long	28/05/2008 12:00:00 PM	3.45	10/06/2008 12:00:00 PM	3.32	-3.77%	-160.43	-3.96%	1173	-1094.35
MGX	Short	10/06/2008 12:00:00 PM	2.86	11/06/2008 12:00:00 PM	2.91	1.75%	-102.45	-1.95%	1837	-1196.8
QAN	Short	10/06/2008 12:00:00 PM	3.32	11/06/2008 12:00:00 PM	3.38	1.81%	-70.97	-2.01%	1064	-1267.77
LGL	Short	11/06/2008 12:00:00 PM	2.88	17/06/2008 12:00:00 PM	2.98	3.47%	-199.23	-3.68%	1882	-1467
MGX	Long	11/06/2008 12:00:00 PM	2.91	3/07/2008 12:00:00 PM	2.8	-3.78%	-126.93	-3.98%	1097	-1593.93
CGF	Short	23/05/2008 12:00:00 PM	2.04	9/07/2008 12:00:00 PM	2.18	6.86%	-358.96	-7.07%	2489	-1952.9
MAP	Short	28/05/2008 12:00:00 PM	2.82874	24/07/2008 12:00:00 PM	2.7528	-2.68%	128.19	2.49%	1822	-1824.71
DXS	Short	16/05/2008 12:00:00 PM	1.58175	6/08/2008 12:00:00 PM	1.50552	-4.82%	232.37	4.62%	3177	-1592.33
DXS	Long	6/08/2008 12:00:00 PM	1.50552	8/08/2008 12:00:00 PM	1.42929	-5.06%	-276.44	-5.26%	3492	-1868.77
DXS	Short	8/08/2008 12:00:00 PM	1.42929	11/08/2008 12:00:00 PM	1.44835	1.33%	-76.45	-1.53%	3485	-1945.23
TTS	Short	3/06/2008 12:00:00 PM	2.33563	12/08/2008 12:00:00 PM	2.37227	1.57%	-84.06	-1.77%	2033	-2029.29
DXS	Long	11/08/2008 12:00:00 PM	1.44835	14/08/2008 12:00:00 PM	1.39118	-3.95%	-203.25	-4.14%	3387	-2232.54
TTS	Long	12/08/2008 12:00:00 PM	2.37227	15/08/2008 12:00:00 PM	2.36311	-0.39%	-27.32	-0.59%	1966	-2259.86
DXS	Short	14/08/2008 12:00:00 PM	1.39118	15/08/2008 12:00:00 PM	1.42929	2.74%	-138.34	-2.94%	3380	-2398.2
DXS	Long	15/08/2008 12:00:00 PM	1.42929	19/08/2008 12:00:00 PM	1.38641	-3.00%	-185.66	-3.20%	4063	-2583.86
TTS	Short	15/08/2008 12:00:00 PM	2.36311	20/08/2008 12:00:00 PM	2.38143	0.78%	-33.12	-0.98%	1436	-2616.99
CPA	Short	19/08/2008 12:00:00 PM	1.31	20/08/2008 12:00:00 PM	1.32	0.76%	-54.21	-0.96%	4292	-2671.19
GMG	Short	19/05/2008 12:00:00 PM	3.71875	27/08/2008 12:00:00 PM	2.67258	-28.13%	1400.58	27.96%	1347	-1270.61
TTS	Long	20/08/2008 12:00:00 PM	2.38143	1/09/2008 12:00:00 PM	2.31732	-2.69%	-91.31	-2.89%	1327	-1361.92
TTS	Short	1/09/2008 12:00:00 PM	2.31732	3/09/2008 12:00:00 PM	2.36311	1.98%	-78.89	-2.18%	1563	-1440.81
MAP	Long	24/07/2008 12:00:00 PM	2.7528	16/09/2008 12:00:00 PM	2.49651	-9.31%	-501.89	-9.50%	1919	-1942.7
DXS	Long	27/08/2008 12:00:00 PM	1.41976	16/09/2008 12:00:00 PM	1.33401	-6.04%	-365.08	-6.23%	4125	-2307.78
DXS	Short	16/09/2008 12:00:00 PM	1.33401	17/09/2008 12:00:00 PM	1.37212	2.86%	-180.12	-3.06%	4413	-2487.9
CGF	Long	9/07/2008 12:00:00 PM	2.18	18/09/2008 12:00:00 PM	2.07	-5.05%	-247.35	-5.24%	2165	-2735.25
MGR	Short	16/09/2008 12:00:00 PM	2.265	19/09/2008 12:00:00 PM	2.57589	13.73%	-611.57	-13.94%	1937	-3346.82
TTS	Long	3/09/2008 12:00:00 PM	2.36311	22/09/2008 12:00:00 PM	2.31822	-1.90%	-74.31	-2.10%	1499	-3421.13
CGF	Short	18/09/2008 12:00:00 PM	2.07	22/09/2008 12:00:00 PM	2.4	15.94%	-722.79	-16.16%	2161	-4143.92
GMG	Short	23/09/2008 12:00:00 PM	2.32092	24/09/2008 12:00:00 PM	2.46159	6.06%	-360.72	-6.27%	2480	-4504.64
TTS	Long	23/09/2008 12:00:00 PM	2.4327	29/09/2008 12:00:00 PM	2.2896	-5.88%	-318.56	-6.08%	2155	-4823.2
GMG	Long	24/09/2008 12:00:00 PM	2.46159	29/09/2008 12:00:00 PM	2.32092	-5.71%	-318.83	-5.91%	2192	-5142.03
MTS	Short	30/09/2008 12:00:00 PM	3.97	1/10/2008 12:00:00 PM	4.3	8.31%	-384.27	-8.52%	1136	-5526.3
DXS	Long	17/09/2008 12:00:00 PM	1.37212	8/10/2008 12:00:00 PM	1.27683	-6.94%	-407.33	-7.14%	4159	-5933.63
LGL	Short	3/10/2008 12:00:00 PM	2.63	9/10/2008 12:00:00 PM	2.64	0.38%	-23.96	-0.58%	1569	-5957.59
LGL	Long	9/10/2008 12:00:00 PM	2.64	10/10/2008 12:00:00 PM	2.49	-5.68%	-241.07	-5.88%	1554	-6198.66
DXS	Short	8/10/2008 12:00:00 PM	1.27683	21/10/2008 12:00:00 PM	1.31018	2.61%	-149.17	-2.81%	4151	-6347.84
DXS	Long	21/10/2008 12:00:00 PM	1.31018	22/10/2008 12:00:00 PM	1.21013	-7.64%	-403.41	-7.83%	3933	-6751.25
CPA	Long	20/08/2008 12:00:00 PM	1.32	24/10/2008 12:00:00 PM	1.2	-9.09%	-535.29	-9.28%	4369	-7286.54
LGL	Short	10/10/2008 12:00:00 PM	2.49	3/12/2008 12:00:00 PM	2.34	-6.02%	225.01	5.83%	1550	-7061.52
LGL	Long	3/12/2008 12:00:00 PM	2.34	5/12/2008 12:00:00 PM	2.25	-3.85%	-165.06	-4.04%	1745	-7226.58
LGL	Short	5/12/2008 12:00:00 PM	2.25	8/12/2008 12:00:00 PM	2.32	3.11%	-129.9	-3.31%	1742	-7356.48
LGL	Long	8/12/2008 12:00:00 PM	2.32	10/12/2008 12:00:00 PM	2.26	-2.59%	-105.46	-2.78%	1633	-7461.94
LGL	Short	10/12/2008 12:00:00 PM	2.26	11/12/2008 12:00:00 PM	2.35	3.98%	-154.21	-4.19%	1630	-7616.16
DXS	Short	22/10/2008 12:00:00 PM	1.21013	11/02/2009 12:00:00 PM	0.805168	-33.46%	1581.57	33.30%	3925	-6034.59
DXS	Long	11/02/2009 12:00:00 PM	0.805168	17/02/2009 12:00:00 PM	0.743232	-7.69%	-485.72	-7.88%	7651	-6520.31
DXS	Short	17/02/2009 12:00:00 PM	0.743232	13/03/2009 12:00:00 PM	0.743232	0.00%	-11.69	-0.20%	7865	-6532
DXS	Long	13/03/2009 12:00:00 PM	0.743232	16/03/2009 12:00:00 PM	0.719411	-3.21%	-198.48	-3.40%	7850	-6730.48
DXS	Short	16/03/2009 12:00:00 PM	0.719411	17/03/2009 12:00:00 PM	0.757525	5.30%	-310.16	-5.50%	7834	-7040.63
DXS	Short	20/03/2009 12:00:00 PM	0.65271	24/03/2009 12:00:00 PM	0.733704	12.41%	-672.39	-12.62%	8162	-7713.02
OZL	Short	23/05/2008 12:00:00 PM	3.33	1/06/2009 12:00:00 PM	0.9	-72.97%	3699.3	72.85%	1525	-4013.72
CPA	Short	24/10/2008 12:00:00 PM	1.2	3/06/2009 12:00:00 PM	0.84	-30.00%	1560.71	29.83%	4360	-2453.02
OZL	Long	1/06/2009 12:00:00 PM	0.9	4/06/2009 12:00:00 PM	0.87	-3.33%	-204.6	-3.53%	6440	-2657.62
CPA	Long	3/06/2009 12:00:00 PM	0.84	4/06/2009 12:00:00 PM	0.8	-4.76%	-284.23	-4.96%	6826	-2941.85
OZL	Short	4/06/2009 12:00:00 PM	0.87	5/06/2009 12:00:00 PM	0.885	1.72%	-108.66	-1.93%	6485	-3050.51
CPA	Short	4/06/2009 12:00:00 PM	0.8	15/06/2009 12:00:00 PM	0.825	3.12%	-187.76	-3.33%	7052	-3238.27
LGL	Long	11/12/2008 12:00:00 PM	2.35	7/07/2009 12:00:00 PM	2.85	21.28%	743.19	21.06%	1502	-2495.08
LGL	Short	7/07/2009 12:00:00 PM	2.85	16/07/2009 12:00:00 PM	2.92	2.46%	-126.69	-2.66%	1672	-2621.76
LGL	Long	16/07/2009 12:00:00 PM	2.92	17/07/2009 12:00:00 PM	2.87	-1.71%	-88.65	-1.91%	1589	-2710.41
CFX	Long	17/07/2009 12:00:00 PM	1.745	28/07/2009 12:00:00 PM	1.71	-2.01%	-100.29	-2.20%	2608	-2810.71
TPI	Long	28/07/2009 12:00:00 PM	1.29	14/08/2009 12:00:00 PM	1.1	-14.73%	-663.94	-14.91%	3451	-3474.64
TPI	Short	14/08/2009 12:00:00 PM	1.1	17/08/2009 12:00:00 PM	1.17	6.36%	-248.9	-6.57%	3444	-3723.54
JHX	Short (6)	26/03/2009 12:00:00 PM	4.05	15/10/2009 12:00:00 PM	8.09838	99.96%	-4665.55	-100.26%	1149	-8389.09
HVN	Short	30/09/2008 12:00:00 PM	3.09	6/11/2009 12:00:00 PM	4.11	33.01%	-1826.36	-33.24%	1778	-10215.45
MGR	Long	1/06/2009 12:00:00 PM	1.06632	4/12/2009 12:00:00 PM	1.43	34.11%	1009.51	33.87%	2795	-9205.94
MGR	Short	4/12/2009 12:00:00 PM	1.43	8/12/2009 12:00:00 PM	1.455	1.75%	-77.83	-1.95%	2791	-9283.77
MGR	Long	8/12/2009 12:00:00 PM	1.455	10/12/2009 12:00:00 PM	1.42	-2.41%	-101.85	-2.60%	2689	-9385.61
MGR	Short	10/12/2009 12:00:00 PM	1.42	11/12/2009 12:00:00 PM	1.46	2.82%	-115.09	-3.02%	2684	-9500.7
CNP	Open Short	12/05/2008 12:00:00 PM	0.385	14/01/2010 12:00:00 PM	0.28	-27.27%	1355	27.10%	12987	-8145.71
MRE	Open Short	13/05/2008 12:00:00 PM	2.93279	14/01/2010 12:00:00 PM	0.731693	-75.05%	3744.43	74.93%	1704	-4401.28
IFN	Open Long	17/06/2008 12:00:00 PM	1.64	14/01/2010 12:00:00 PM	1.46	-10.98%	-583.17	-11.16%	3185	-4984.45
MGX	Open Short	3/07/2008 12:00:00 PM	2.8	14/01/2010 12:00:00 PM	1.805	-35.54%	1083.49	35.37%	1094	-3900.96
OZL	Open Long	5/06/2009 12:00:00 PM	0.885	14/01/2010 12:00:00 PM	1.205	36.16%	2025.09	35.92%	6370	-1875.88
CPA	Open Long	15/06/2009 12:00:00 PM	0.825	14/01/2010 12:00:00 PM	0.94734	14.83%	829.02	14.61%	6876	-1046.85
TPI	Open Long	17/08/2009 12:00:00 PM	1.17	14/01/2010 12:00:00 PM	1.38	17.95%	627.54	17.73%	3025	-419.32
IPL	Open Long	6/11/2009 12:00:00 PM	2.62	14/01/2010 12:00:00 PM	3.64	38.93%	1416.19	38.69%	1397	996.88
MGR	Open Long	11/12/2009 12:00:00 PM	1.46	14/01/2010 12:00:00 PM	1.62	10.96%	397.32	10.75%	2532	1394.2


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## tech/a (15 January 2011)

> btw, that's long and short.




Nah not allowed you chose the period.
Cant have it *ALL* your way.

Oh and you haven't out performed buy and hold.


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## It's Snake Pliskin (16 January 2011)

Why does a beginners thread have a challenge in it? I don't see this as helpful for people wanting to chat as a beginner. Why not start a challenge thread in the strategy forum?
We could even have pictures of chests to pin the results on?


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## tech/a (16 January 2011)

It's Snake Pliskin said:


> Why does a beginners thread have a challenge in it? I don't see this as helpful for people wanting to chat as a beginner. Why not start a challenge thread in the strategy forum?
> We could even have pictures of chests to pin the results on?




Because GB asked me to put my money where my mouth is.
I dont believe a single indicator gives you an edge.
GB does.
Adds interest 
I personally would prefer gold stars on the forehead.


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## It's Snake Pliskin (17 January 2011)

tech/a said:


> Because GB asked me to put my money where my mouth is.
> I dont believe a single indicator gives you an edge.
> GB does.
> Adds interest
> I personally would prefer gold stars on the forehead.



Who is GB?
Price as a single indicator?


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## Wysiwyg (30 July 2015)

Wysiwyg said:


> Look at it this way. If you take a technical entry point into a security, it is only after that entry do you know if it worked or not.
> All T.A. is hindsight representation. A 50/50 bet. But! There may be certain technical markers that seem  to produce more certainty than others. After all, we are looking for repetition of an event to capitalise on. A better than 50/50 bet.



This is my post from year 2010 so I have had some more experience since then. My most noticeable recurring adverse result is that whenever I put money on a trade due to favourable past technical signal entry and ensuing price action, the price action is different more often. When I exit on stop loss the price more often than not reverses. I begin to wonder if I am being taken for a ride by the market. Sought of squeezed dry slowly. It could be trading during volatility being the reason. Market timing off another reason. I have enemies too.


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## Trembling Hand (30 July 2015)

Wysiwyg said:


> I begin to wonder if I am being taken for a ride by the market.




Or maybe your beliefs. How do you know that risking dollars on "favourable past technical signal entry and ensuing price action" is actually favourable?


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## Wysiwyg (30 July 2015)

Trembling Hand said:


> Or maybe your beliefs. How do you know that risking dollars on "favourable past technical signal entry and ensuing price action" is actually favourable?



I have found that *it isn't* for me as I stated in my post.  



> My most noticeable recurring adverse result is that *whenever I put money on a trade due to* favourable past technical signal entry and ensuing price action, the price action is different more often.


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## tech/a (30 July 2015)

Wyzi

What is for you?


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## Trembling Hand (30 July 2015)

Wysiwyg said:


> I have found that *it isn't* for me as I stated in my post.




So is the world against you or is it that your favourable setups are actually rubbish?


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## Wysiwyg (30 July 2015)

tech/a said:


> Wyzi
> 
> What is for you?



I don't know anymore. I am going to sit on my stock holdings for a while and let this market go.


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## tech/a (31 July 2015)

Wysiwyg said:


> I don't know anymore. I am going to sit on my stock holdings for a while and let this market go.




That's a fair enough comment.

But do you agree it's a numbers game----in general terms.

Either.

More wins than losses where accumulated wins out value accumulated losses.
Or 
Bigger wins than losses 
Or
A combination of both.

Personally I find that when I'm pushing against the wrong side of the market my aim is (2)
When I find myself on the right side of t market my aim is (3). More opportunities arise when I'm on the right side----whether that be stock or futures. With Futures I have more opportunity in a shorter time frame to get on the right side.

Again personally --- I've embraced that I'll be wrong more often than I'm right over a very long time.
I'll have long strings of losses and I'll get the same in wins at times---but if I keep in mind my objective 
(1),(2), and (3) Then it doesn't become a constant battle when I'm on the wrong side. I can identify it because of my results. *Then not doing the same thing time and again expecting a different result!!*

Either change or Wait
All the while minimizing loss.


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## sinner (31 July 2015)

Wysiwyg said:


> I don't know anymore. I am going to sit on my stock holdings for a while and let this market go.




To me this post sounds like exhaustion. Now, no reason for you to listen to anything I say over any other InternetJoe, but here are some quotes from Hussmans most recent weekly market comment:

http://hussmanfunds.com/wmc/wmc150727.htm


> Put simply, valuation drives long-term returns, and investor risk-preferences drive returns over shorter portions of the market cycle. When measures of both are hard-negative, as they are now, *investors should think carefully about their own risk-tolerance and their ability to sustain losses without abandoning their discipline, making sure to align their investments with the actual horizon over which they will need to spend the funds.*
> 
> Every share of stock that has been issued has to be held by someone at every moment in time, so there is no sense in encouraging investors – generally – to sell. *What matters is that your own portfolio is carefully aligned with your own tolerance for risk and spending plans. *If you follow a carefully considered buy-and-hold strategy, and you don’t believe that market returns can be anticipated regardless of valuations, market action, or other considerations, then by all means stick to your discipline. Our own approach generally aligns our investment outlook with the expected return/risk profile we identify at any given time, so our outlook is hard negative here.
> 
> *In any event, this is no time to be on autopilot.*


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## howardbandy (31 July 2015)

Greetings --

Regarding John Hussman's advice that "investors should think carefully about their own risk-tolerance and their ability to sustain losses without abandoning their discipline"

-------------

While Mr. Hussman and I probably have different risk parameters, I agree with his advice.  I recently gave a presentation on risk that addresses personal risk tolerance and the risk associated with several aspects of trading.  It is entitled "The Four Faces of Risk" and is on YouTube:
https://www.youtube.com/watch?v=Vw7mseQ_Tmc&feature=youtu.be

Among other points, it demonstrates how to quantify, and even plot, a personal risk tolerance.  Then measure the risk associated with recent trades and adjust position size during trading to manage risk so that drawdown does not exceed those limits.

---------------

With regard to the title of this thread -- "Technical Analysis -- Smoke and Mirrors?"  

Are there alternatives other than technical analysis and fundamental analysis?

Fundamental analysis has the flaws of infrequent granularity, delayed reporting, revision to previously reported data, bias of the reporter, bias of probably non-repeatable post-WWII expansion, inability to validate results on not-previously-used data, etc, that render it not useful.   

If not technical analysis, then what?  

--------------------

Best regards,
Howard


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## tech/a (31 July 2015)

> Put simply, valuation drives long-term returns, and investor risk-preferences drive returns over shorter portions of the market cycle. When measures of both are hard-negative, as they are now, investors should think carefully about their own risk-tolerance and their ability to sustain losses without abandoning their discipline, making sure to align their investments with the actual horizon over which they will need to spend the funds.




Understand the statement.



> Every share of stock that has been issued has to be held by someone at every moment in time, so there is no sense in encouraging investors – generally – to sell. What matters is that your own portfolio is carefully aligned with your own tolerance for risk and spending plans. *If you follow a carefully considered buy-and-hold strategy, and you don’t believe that market returns can be anticipated regardless of valuations, market action, or other considerations, then by all means stick to your discipline.* Our own approach generally aligns our investment outlook with the expected return/risk profile we identify at any given time, so our outlook is hard negative here.
> 
> In any event, this is no time to be on autopilot.




Don't understand what a *Carefully* considered buy hold strategy is if it has no of those components mentioned in black. What is it you would have carefully considered to buy and hold those in a portfolio?
Continuing to hold looks a lot like Hope.


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## sinner (31 July 2015)

tech/a said:


> Don't understand what a *Carefully* considered buy hold strategy is if it has no of those components mentioned in black. What is it you would have carefully considered to buy and hold those in a portfolio?
> Continuing to hold looks a lot like Hope.




Carefully considered buy and hold strategy would take into account the maximum drawdown, the duration of the investment, and so on.

Perhaps (for example) an investor has decided they are ok with 80% drawdowns and plans to hold for 35 years. Some people are. And it is fine, so long as those considerations align with their risk preferences and spending horizon. Hussman is not, which is why his strategy accounts for both valuations and short term risk preferences (breadth, credit spreads, etc). But he is not trying to sell his strategy.


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## Joules MM1 (31 July 2015)

there's a distinction between a vague philosophical (or even an on-point philosophical) visualization
and that is that the visualizer anticipates the person receiving the message understands the details and subtle nuances within

of course, puting aside the idea that the message may merely be posturing or grand-standing

in the instance the receiver understands what is being said then the receiver is unlikely to need to receive anything at all 
and while affirmative banter is one thing, education, especially a thoroughly investigative education, that takes into account 
not just the financial cost but the emotional risk of the reciever, 
that's the area most people tip their 
hats to but never have follow-thru and this is extremely dangerous

so, first, how do we dissect what is being said and what the motivation for saying whatever it is
not like a psychobabble way, i mean, in a useful and practical way, to build a series of tools
given the platform of text and pictures and the immediacy of this.....

if you look at the quotes, what is it that is really being said?

one cannot in any measure build an accountable way, or method of trading, 
when one is in limbo-land from
mid-stream moments of other ideas from other posters .....no matter what great intentions are coming most of the time the people 
who need the most help are hindered with cloudy pseudo stuff in parcels wrapped in further mystery...

you have one poster on this thread who asked hard and straight questions


> So is the world against you or is it that your favorable setups are actually rubbish?




the response was 







> I have found that it isn't for me




these two quotes clearly dictate two states of being

not two states of opinion; two states of being

asking incisive question to arrive at concise answers to arrive at new ideas
that are useable that can create realizable results and personal accountability

the second person has responded with an answer that is fine in itself, in that, 
that is the place the poster is emotively given to
....it is not a place to be judged, rather to be vigorously 
probed to see if the reason with that disposition 
is merely based on a lack of knowledge .....many people simply screw up their accounts because they fear looking dumb or do not know what 
questions to ask or how to ask them...there's always discomfort when the original basis of the journey is not based on itself but some other motive.

to get to points of recognition at speed, one must ask direct questions and further, I say, must rigorously dissect anything that washes over the very things that require inspection, 
this, I think, is true of all forums...a bit of this a bit of that, everything becomes a bit of a wash

that is, of course, my humble opinion ....and may i offer that i have traded for at least as long as I have been a member of this forum

also an opinion, just an opinion, that quitting is the point of outward action of an inner recognition arrived at long before the act 
of quitting occurred, that a return must be based on a new set of personal accountable
rules or guidelines, that the real drivers of involvement be clear and concise...that quitting is the recognition of a new path, 
opens a new doorway.....

your success is not for someone else to recognize as much as it is not theirs to enact for you,
that success can be framed in two words; responsibility and accountability
when one decides to give up one of those to an emotive disposition  
the  probabilities are that the original journey is fulfilled.

and responsibility toward other people is often under-weighted, in that, you post with an idea that posting it carries implied knowledge, 
yet fail to ask reasonable questions, without knowing the scope of the recipients education or experience, so, how can one really take on 
another persons ideas when so many underlying questions need clarity first before any type of dialogue ensues....

be clear about this: your words carry weight 

as has always been true, piece-meal posts are the least helpful, including this one in many respects, in that, again, for the recipient to 
fully grasp all the concepts (text form) the recipient must already have a clear understanding of the mechanics, constraints, avenues and 
maliable ideas involved ...in other words, that person need already be fully educated to then go on and grasp the finer parts that are still 
unknown (and i'm not saying experience, as that is itself a different thing)

clearly, when there is no conversation that uncovers either posters depth of knowledge and experience then the ensuing conversation is a cobblestone bikeride

in the quotes, one is reaching for clarity, the other is reaching for a pillow

this forum is a trading forum

I say, there are several effective traders who come here to read this forum and rarely speak, I'll tell you why, 
it's nothing to do with you stealing their ideas or how effective they are as traders
it is that they understand the power of their own words and the energy required to have a full and clear conversation that not only takes you
forward, that missing parts are far more dangerous than the known parts are an advantage, that they accept responsibility for their words
that they know many people are not here to learn in its' essence, rather, confuse rigorous debate and knowledge with coffee and biscuits
and that incisive debate is not about posturing or looking good


you may need to re-read some parts due to the language I have used here

much work needs to be done before any  "technical analysis" and a conversation for another thread, probably


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