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Improving Chart Analysis

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Many years ago I worked out how to win at two up. Heads and tails , a 50\50 chance. BUT most ( about 70% ) people bet on heads. My system was to wait until tails lost twice in a row Then bet on tails. there is always someone in the ring will take it. I never called that gambling I called it investing. I know most things come back to 50\50. The secret will be to work out the times it is out of balance or moving back to balance.
 
tech/a said:
When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.

Enjoy.
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Agree with you 100% tech , trouble is as in horse racing, people keep on seaching for the Holy Grail , instead of concertrating on what its all about : Trade / Money Management, am convinced that most never learn and just continue on their road to doom , then turn around claim the Races/ Markets are rigged


Nioka : if your going to play the stats game , you need thoundsands of sample sets ,over varying time periods --- quite assure you many have been down that road only to see it fail --- varying circumstances in which you can not be aware of will change the stats dramatically .



Cheers
 
It's the punters who look for the holy grail. The bookie is the one that understands the odds and collects the punters money by laying the odds so that he very seldom loses.I had an uncle who did very well at that. He always said not to bet it was a fools game but he told me how to play with the odds well in your favour as in the two up. I have done OK with the stock market but always as an investor not as a trader, but I am interested in understanding the odds. I do understand and appreciate your comments.
 
Hello Les,


I figured out what you were talking about in this sentence. The little blue box is out of the general tools to highlight the junction of the date and the red line I drew on the chart. The bottom wasn’t showing on one because something else was selected so the bottom was obscured by it.

These are just manual markers I use when sending charts to other people so they can easily see what I’m talking about. The red line I manually calculated and deployed. The blue box I set to size manually to enclose the date and price target.

The Square on the other hand is highly configurable where the time intervals and angles can be modified to suit what you are trying to achieve. I was using what McLaren interpreted as Gann “Time Angles” – very useful once you know how to use them.


Regards


Magdoran
 
Some very interesting thoughts here in this thread.

Magdoran - a simple question. If you stripped away all the complexity that you overlay on your trading would your profitability alter?

To put the question another way - does your entry technical analysis give you an edge over and above the edge conferred by your exit/risk/money management?
 
tech/a



However it is the outliers we must attempt to find.
When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.
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The outliers, as you refer to them, can be identified through analysis.
The outliers, will, as alluded to, outperform the market averages.

The numbers you put up recently for TT, had something like;
TT +34%
Market +27%

As TT is a mechanical system, that cuts a loss at 10%, in a rising market, which so far has been the case, the trend following nature of TT performs well.

The outliers that would be most interesting are;

Market +5%
Outliers +30%

Market -10%
Outliers +30%

Needless to say, I therefore refute your premise & assertion that analysis becomes redundant and in point of fact, becomes the primary factor within identifying outperformance.

jog on
d998
 
Well I dunno what the hell ur all on about....<edit>

Thank you all for the info though......I realy appreciate it and have made a few $$$$$$$ from this site.

Charts are a mystery....but have some meaning when you guys post them...ie if you recon they';re good then i put a little of my pension on them, and make enough to pay for a Brew for the lads down at the club.......and enough to pay for the internet connection, to totaly get on our asses and make me and the old gals at the club a $$$ or two.

Love the mystery of the charts and had a go at a refudable course (Hometrader) but found out that all you have to do is watch the news on tv and guarantee a buck......voted MBL as a winner 2 days ago ...hehe....good luck to alll....and watch out for us blooody pensioners when you're riding your bloody bikes you ungrateful bunch of louts !
 
To true my son. tooooooooo true, C'mon don't give all the secrets away to all these YOUNG fellas, or our pensons will be nill!



 
Watch out for me on my scooter MATE!.....and my FRIENDS.....they have scooters too you know......run u down matey......




Sorry, I was having a flashback
 
However it is the outliers we must attempt to find when trading shorterterm.
When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.
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Sorry duc I was less than specific when I posted my quote.I have altered it to be more accurate to what I was saying.
There are 2 outlier forces in play at times.
The market itself.
The instrument being traded.

What I mean by analysis having very little to do with profit,I dont mean it has nothing to do with it.All it does in my veiw is place you in a position to trade (Entry) and place you in a position to exit.
The real money is in the Compounding and leverage and position sizing.
 

You are fooling yourself if you believe you are beating the odds with this method.

Its known as Martingale,you are presuming that 2,3,4 or more heads in a row increases the chance for a tail to be flipped and if truely martingale youll be adding to your bet each time you have a loss.
Casinos will put you up for as long as you want if you tell them you are going to play martingale whilst at their casino.
 
Hello Michael,


You know, I’ve seen some real “wizzer” charts in my time, ones full of stochastics, MACD’s, RSI, ADX, MA’s, EMAs, PC generated Elliott wave counts, trend lines, horizontal support and resistance lines, channels, range projectors, arcs, etc etc….

Believe me, the square is really simple to deploy and calibrate once you know what to look for in a blank chart, and in the right circumstances is very helpful as a tool to calculate and highlight probable areas of support and resistance in time and price. But the pattern is the key first and foremost.

If you can’t see the trend, and more importantly, understand what counter trends look like, and understand the nature of different types of trend, then all the gizmos in the world won’t make you a better trader.

Can I trade without any tools? Sure. I can trade from a straight chart. Marking a chart so you highlight things so when you come back to that chart later so you don’t forget what you saw, and comparing it to a clean chart can be worthwhile (especially if you manually track a lot of charts rather than scan the market).

But the different tools I employ speed up the analysis, and definitely help with accuracy when trying to figure out probable areas of support and resistance (including in time). This is critical if you’re using options. The whole process hinges on time.

So, no, I really don’t think it’s complex at all. Learning it is, but, just like learning to drive a car, you can’t expect to become a formula 1 driver overnight. But as you gain experience with anything, your abilities to execute improve (and if they don’t maybe you shouldn’t be in the race).

The squares are just a tool like an MA, MACD. They can help to reveal vibrations in time and price, that’s all… they just require a conceptual shift in thinking, recognising time as a critical element in the mix… I suspect that it just looks complicated to a non user, especially if you don’t know the logic behind it.


Hope that makes sense, and this is just my best shot guess like anyone else’s… (Although I’ve spent years on my guessing process like many here, so I suppose yo could call it an “educated guess”).


Regards



Magdoran
 

Never seen this used in a forward trading situation with any accuracy.
Particularly if time and price (The square and its intesection or support/resistance) is named before hand.

Nothing more than a best guess and amusement value.
To be of practical help in trading---"Id like to see that".
Certainly not complicated.
 
Brother Tech,


In a broad sense I agree with you, making our best shot guess is all any of us really do.

I believe back testing systems are on the same level as any other approach - using a method to make a best shot guess into the future… sure based on positive expectancy – or being the casino ala Douglas. (note I use the word “believe”).

Some people will swear that running a number crunching algorithm over a piece of chart history will return a percentage probability. Sure, it does, but for that period of history. What it doesn’t do is to reveal what will happen in the future, and it is necessarily tied to the unique period of history it was based on.

What I do is to make an “educated guess” about what might happen, and formulate a derivative strategy with the best risk to reward characteristics balanced with my best shot assessment of probabilities for success that I can devise with my abilities.

I assert that this is really what you are trying to do, but with a different method. The fact you punch some numbers into a computer and set up some parameters with an algorithm is still guessing. Sure, it’s a sophisticated guess, but nothing more. To wheel out the old cliché, “no one has a crystal ball”.

So the question is, is there a qualitative difference in styles? Well, to be honest, I only have suspicions because I don’t think it’s possible effectively assess all the different approaches to a truly objective level. Why? Because the veracity of the data is in question. There are commercial imperatives involved, and people and organisations will not be truthful: they will skew, distort, and omit data, sometimes in an effort to publish disinformation as a strategy, or to hide financial situations, or for countless other human reasons.

So what I’m saying is, how are you going to meaningly assess anything in a highly competitive arena, and how can any hypothesis be proven in an academic sense. I’m arguing that you can’t. So what we’re left with is opinion, belief and gut feeling, and nothing more. Sure, some opinions are more rigorous, and coherent, but they are based on the best shot guess of the individuals involved.

I see it as a marketing exercise between competing “sects” of financial “styles”, or in a sense a hearts and minds competition between competing financial “religions”. Yes, I’m saying it is all based on belief at the core, and that different groups have preconceived notions. An edge then is to perceive this and use it to your advantage.

The market is like a giant chess game, and it is how each player manoeuvres on the field in the long run that I would argue is the real test.

Hence I keep saying, if it works for you, great! We all have our own personal journey, don’t we? The trick is not to fall for a self fulfilling prophecy (just look at Soros’ arguments in “The Alchemy of Finance” and you’ll know where I’m coming from).

I freely admit that I may be totally deluded about everything I perceive, it is entirely possible. But it is possible we are all deluded in our own special unique way. I don’t believe anyone is omnipotent, brother tech. So, all any of us has is our own belief to guide us, and that is what is happening here.

I really think it is more like different marital arts schools trying to do the same thing but in their own unique way.

In which case I’d argue that all the methods are for amusement value, not just the ones you like to pick. So your approach is for amusement value too, in the broadest sense, isn’t it?

That may be more profound a realisation than you were expecting. It is something for you to mull over in those quiet reflective moments.


Regards


Magdoran

P.S. I do think the approach can at times be very accurate, but not always - you have to know how to use it. A lot is dependant on the skill of the individual, and you have seen this style demonstrated on other forums, and dismissed these too.
 
Never play casinos. A percentage out for the house spoils the odds. @ up is a back yard game
 
Hello Michael,


Just reread the second part of your question, and this morning’s answer was the last thing I belted out off the cuff before heading off for a meeting this morning…

To answer the question more fully, yes I think both the entry, but more importantly the exit gives an extra edge, especially using options. Especially partial exits, where your target is hit, but the underlying reverses, so if you doubled, even in the worse case scenario you should at minimum break even.

The exit half is based on an assessment where the underlying is in your estimation likely to counter trend if you are right, or reverse if you are wrong. This is a McLaren based concept to take profits and reduce risk. If you are right and the underlying continues in your direction, you are still in half the position. You can add to the position on counter trends if you like, or stay with the half until the trend is at risk, or if you are trading with options, exit on time, or both.

Please be aware though that this is a work in progress, and that I’m still 2-3 years away from collating the results (maybe even 5 years away), so my estimations are coloured by subjective judgements. I cannot measure the extent that my bias is colouring my view, but being aware of it I hope will compensate sufficiently not to cloud my judgement (too much! Ha! – Cracks me up when Soros said that his notion that everything has a flaw, may itself be flawed – love this paradox!).

So yes, in many cases, not using the right tool could reduce the edge. I believe this to be true, but my view may be coloured (when you get these things right there is an emotional aspect, and time will test this theory out for me personally).

Let me just say in conclusion though that I know people who have done very well out of the market for many years that have been using this kind of approach, they are few, but I tell you, when you see some of their work, you sit up and take notice!


Regards


Magdoran
 
Magdoran said:
Brother Tech,


In a broad sense I agree with you, making our best shot guess is all any of us really do.
Click to expand...

If in actual fact you are attempting to place a time and price on a methodology then yes.The result I will argue is looking for a definative start and finish level.
Here we are different


There is a difference.The start is known and the finish is not and not important in any singular case.
The difference lies in the testing of an application of parameters,entry,Exit,Stops,exits,Position sizing,Leverage,that when tested on a universe and preferably universes,grouping portfolios together, returns a consistant profit (Expectancy).REGARDLESS of the individual performances both in time and price.


On an individual basis this is true,however if you have a beginning in time it could be agrued that during the course of the complete life of a singular chart that X results were likely based upon the results against the parameters tested.


Certainly nothing wrong with this approach.


At the time of punching in untested "idea" yes. But given results and I try to make them exhaustive then no. This leaves me with a blueprint which I can template to actual trading---a map if you like.
I made such a map in 2002 with the published method.I had no idea of forward results.Now in 2006 it has proven to be as the blueprint suggested it would.
I have 2 others not for public viewing that I trade and a few from others who have made up other methodologies.ALL have remained within their blueprints and all have returned in the upper Quartile of their Montecarlo simulations---Bullmarket you say.---Yes it has been but we did not know this at the time of formulating our blue prints.


True but to me its of no interest what is presented to analyse only price---I dont care if its percieved as high or low accurate or in accurate,complete or in complete,its the conglomerate of tested result which regardless of how and by which stock and over which time period,which will determine the methodology I will and do trade.


I'm argueing that you dont have to.


I agree your methodlogy is just as valid TO YOU as mine is TO ME.
I feel mine is "More" definative than yours,I have traded in a similar manner to you but results were to mixed and the effort to much!

The market is like a giant chess game, and it is how each player manoeuvres on the field in the long run that I would argue is the real test.
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Test for what? success---then yes I suppose.


I dont have a belief,just a blueprint,you could argue that because i trade the blueprint then I have a belief in that it works.Hmmm y-e-s but I would not believe it to the point of continuing to trade it if results fell out of the "known" results in the blueprint---simply because testing never returned such results. So its not BLIND faith.


Belief,is intesresting belief is based upon evidence that we accept.
Experience can help,it tends to confirm,even cement beliefs.

I really think it is more like different marital arts schools trying to do the same thing but in their own unique way.
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Having been a Wing Chun student I certainly have respect for other styles.

In which case I’d argue that all the methods are for amusement value, not just the ones you like to pick. So your approach is for amusement value too, in the broadest sense, isn’t it?
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No I dont agree we all look for practical use.If there is no practical use percieved or evident then it to me is amusement in the trading arena.

That may be more profound a realisation than you were expecting. It is something for you to mull over in those quiet reflective moments.
Click to expand...

I have mulled over this question for the 13 yrs Ive been trading and will I'm sure mull,discuss,ponder and investigate and learn as life continues.


Regards


Magdoran

P.S. I do think the approach can at times be very accurate, but not always - you have to know how to use it. A lot is dependant on the skill of the individual, and you have seen this style demonstrated on other forums, and dismissed these too.
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At times?? Well in all the time Ive seen this presented as an analysis method youd think I would have seen a practical demonstration of "Accuracy".
I havent yet.
Gann to me is the technical equivelent of the Da Vince Code

Tech
 
Father tech,

Lord of the priory of Tech-on (Scion???), the vibration codes are still safe from your clutches! (what fun it is to joust with you!).

Hey, I didn’t know you did Wing Chun. There are so many hidden facets to you tech, and you play your hand so close to your chest sometimes. Wonders will never cease! Glad the analogy hit the mark.

So, belief… Quite a topic really. Gets down into some rather heavy philosophy (Descartes for instance, let’s avoid Satre…). Actually belief can also not be based on experience or evidence. Oddly it can exist in the face of strong evidence…

The blue print that you have is static. But you have a belief in the approach you have taken. It is a roadmap, just like the one I create too, the difference is how they are generated. I put my trust in my head to do it over the computer. That’s the difference. I’m not saying you don’t use your intelligence, you clearly do that. But we are doing it in quite different ways.

Which one is better, I really don’t know (or care about – again - whatever works for you). I actually suspect that each can be very profitable in their own right, and each will have their flaws and advantages (we could cover these but we’d be here for a long time).

I think that there is an important distinction to be made between using a computer to crunch numbers using an algorithm, and actually using the “computer between your ears” by actually researching and looking at charts with your own eyes. I believe (and this is only a hunch) that the capacity for the human mind to imagine and create when harnessed correctly should outperform static linear programming hands down.

Computers don’t really think, and they can’t innovate like we can. The potential for us to use our intuition and subliminal/subconscious minds is the driving force that elevated humanity to where we are now.

I suspect that there are patterns in markets that are not obvious at first glance, and that computers are not capable of being cognisant in ways humans can. So, while your PC crunches numbers, my brain is taking snapshots and storing them in ways the PC never can. So when I’m confronted with a barrage of information, I stand a real chance of doing the detective work like Sherlock Holmes, and intuitively recognising aspects you will miss. That is a significant difference I believe.

Tech, I don’t think you see the market the way I do. It is a conceptual paradigm difference – and because you can’t see it, you don’t think it’s there. If you want to “see” it, it’s all in McLaren’s Time Factor DVD – but you have to totally rethink the whole way you perceive markets to do so.

I can see why you feel that your approach is more definitive than mine. Clearly to you it is. And I mirror this feeling, but ultimately I think our aims are similar, but there are some distinctions I’ve outlined. Where we differ is I enjoy spending the time looking at the puzzle of the market (I used to play chess, guitar, ran companies etc – just love the challenge). I’m prepared to put the effort in required. You have chosen a path the works for you.

When you examine a period of history, and run one test, certainly a second and third run may yield a perspective on how you could have played the entries and exits better, and maybe after running 10 or 20 iterations you may come up with an optimal result – for that period.

What I’m arguing is that the whole rationale behind this approach has a significant flaw. It is using a static piece of history that was unique in order to calibrate your system parameters (such as entry criteria, exit criteria, position size, and leverage).

Another key difference is that I am using a different financial instrument to you, and I would argue that there is a symbiotic link between the way a system works, and the instrument used. This is actually a significant difference between our approaches since addressing time for me is of vital importance when using options.

When I look at the risk to reward parameters of an option, and assess the probability, I’m also setting parameters, and in a sense aiming for a positive expectancy just like you are.

As you know, I respect what you have done. I salute the fact you built a system and put it on public display. And it was no small effort to get to where you are now, with a mature, robust system. I also know that it is not blind faith at all. You have excellent businesses acumen. But I do think that your intuition is a major drive in everything you do. You are a very driven person, with a bedrock of adverse experiences to draw on that spur you forward.

You also know that I’m still in the work in progress stage, and it will take a long time to complete. I understand why you don’t want to venture into a body of knowledge which requires a complete paradigm shift, the effort would be too much, and by the time you got it, you may just have well used your current approach. I think you’re making the right choice. I perceive that you will probably never change your point of view on this subject since your perception is so hard wired into your psyche. I respect that, and I suppose that in a defacto sense we will continue to agree to disagree on this matter.

The good thing is that we put on a good show for others to watch, and I hope it inspires them to think originally about what they are doing, and recognise that there is a smorgasbord of choice in the market place.


Regards


Magivinci
 
You are right Mag, You and Tech do put on a good show!! I enjoy reading both your "stuff" .......some seriously deep info here!.......... I like "deep" also, but I always revert to "simplistic", cause thats just me..........keep it coming guys........
PS Mag, do you have a chess rating, or purely for enjoyment?.........Have a friend who is a V. good player (phsycologist......but don't hold that against him! ), Cheers, Barney
 
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