Improving Chart Analysis

[pacer]

A lot of big words to say.......???????.....KISS.....Keep It Simple Stupid

Opinions are just that ..... opinions...what counts are the results!

Queen to Rook4

Love a game of chess...and the stock market....lucky I diddnt go short on coles.....w3ent long on MBL instead...

 

[barney]

A lot of big words to say.......???????.....KISS.....Keep It Simple Stupid

Opinions are just that ..... opinions...what counts are the results!

Queen to Rook4

Love a game of chess...and the stock market....lucky I diddnt go short on coles.....w3ent long on MBL instead...

Well done on the MBL.......(my phsyco friend is also!) ............

We must be near an end game otherwise Q - R4 is a bit passive....(of course you may have my King pinned down the flank in which case I resign before I get into too much trouble!!.. Cheers mate, Barney.

 

[Magdoran]

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

I used to play people who were around the 2000 level... they would kick my butt, but I'd give them a good run for their money...

Mag

 

[barney]

I used to play people who were around the 2000 level... they would kick my butt, but I'd give them a good run for their money...

Mag

My friend is rated over 2000 but not sure how much; would have to check with him..........You sound a bit like me .........I can put up a good fight, but the "depth" of knowledge/understanding that the "better" players have is too big a hurdle to overcome when the position gets tight...or loose for that matter!)

Tell you what I did once though; I challenged my friend to a game via email............... I had downloaded this pretty good "computer" chess programme, and simply let it "make my moves" for me............It picked up a "combination" after about 20 moves in which could not be defended, and put "me" in a winning position............He never forgave me for that (he wasn't paying that much attention cause he knew he could beat "me" easily, but I had the "secret" advantage!!..............These are the things which you "must" do to your friends to keep them humble!!!...........Not that he needs humility; he's a top bloke........knows lots of big words, like yourself!! ...........Reckon you two would have very interesting converstions esok:

 

[lesm]

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

This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.

No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings

 

[lesm]

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.

Magdoran,

Thanks for the update and the clarification. I thought that may have been the case with respect to the box, Just wanted to make sure.

There were elements of the chart that were easy to work out. It was just a question of clarifying which parts were actually being done via Gannalyst settings.

Cheers.

 

[tech/a]

Lesm

We are on the same wavelength.

I'll go a little further and as a technical follower say that over time the best you can expect from a technical application wether it be Oscillator,Price,Patterns,Time analysis,Fundamental--you name it is a 50?50 proposition.

So why consider ANY analysis.

Because in the makeup of any statistical results there will be many many occurences of average nature and there will be outliers both for and against your analysis.

As an example in a coin toss there will be many tails followed by a head.
Less of 3 tails followed by a head less again of 10 tails followed by a head,and ofcourse a myriad of combinations in between.

In short term analysis its the 3 in a row we attempt to "analyse"
Longer term its the 10 in a row.

What I see are practitioners in EVERY field that are convinced that their analysis finds the outliers EVERYTIME,with every trade.Failure upon failure hits trader upon trader when success is so near if only they developed methodologies that werent dependant on being CORRECT.

Analysis isnt an exact science and never will be.
90% of traders trade all sorts of analysis as if it is.
90% fail.

Outliers come rarely you wont know when they are about to perform,analysis will put you in a position,to take advantage of an outlier move but wont guarentee that the trade youve just taken will be the one.

Numbers tell us that its going to be out of the norm for larger outliers,so as Radge says, prove-disprove-prove-disprove.

 

[ducati916]

tech/a

Outliers come rarely you wont know when they are about to perform,analysis will put you in a position,to take advantage of an outlier move but wont guarentee that the trade youve just taken will be the one.

With true statistical data, outliers, are formed in the bell curve distribution, and measured via standard deviations, thus, the large outliers tend to be rather infrequent.

However, the market, is not statistical.
The market is deterministic.
Thus, outliers exist in the fat tails and are much more frequent.

Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
Hence, the %winners will be high, and the %return will be high.
Thus your expectancy, will be high.

TT is not an analysis based model...........it is a money management model Fundamental valuation models are analysis models, with a discretionary money management element.

jog on
d998

 

[tech/a]

Why then Ducster is it that if I remove all analysis (leaving only random buy and random sell,all M/M parameters remain) it fails dismally?

 

[ducati916]

Why then Ducster is it that if I remove all analysis (leaving only random buy and random sell,all M/M parameters remain) it fails dismally?

Depends how you classify analysis.
New highs, hardly classifies as analysis, but, if you call it analysis, then removing it would cause the entry and exit, to become random.

I classify the chart pattern, [new highs, 180 EMA exit] as money management. In fact, I would argue that technical analysis is a misnomer, and that technical analysis is simply pattern based money management.

jog on
d998

 

[Realist]

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.

 

[tech/a]

I would argue that technical analysis is a misnomer, and that technical analysis is simply pattern based money management.

Thats an interesting comment,infact it could be a sound analogy of Systems developement using tech analysis.
I'll ponder!

 

[tech/a]

I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.

Actually you maybe interested to know that they have proven mathamatically that it doesnt matter how many monkeys you place at any number of type writers,you'll NEVER get the complete works of Shakespear typed out.

So while you may get a word or so or even a sentance typed out,so the Dart board/Gann practitioner may have a profitable trade or a string of profitable trades.Over time----never the complete works of Shakespear.

I'm sure you get my drift.

By the way lookforward to seeing the Crows knock off Sydney next week.
If we are not good enough then Westcoast will do the job.
2 best sides in the comp playing in a few hrs.

 

[Magdoran]

This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.

No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings

Les raises some really interesting points, and I will try to address these as best I can with what I currently know and understand. Let’s focus on technical analysis without delving into system concepts such positive expectancy (which is an important piece of the puzzle, but too vast a subject to deal with here).

So let’s consider the question, just how viable is technical analysis really? This begs the question about the broad applicability between modes of market approaches such as Fundamental Analysis, Technical Analysis, and bodies of knowledge like the Random walk theories, Reflexivity, and a host of other perspectives. It may well be that technical analysis and any or all the other modes are necessarily flawed. If so, the question then is, are any modes of any use, and if so, to what extent can they be utilised when dealing with market decisions? Let’s focus on technical analysis.

Discussing this kind of subject can get very messy very quickly because there are problems with semantics, building blocks of concepts, levels of knowledge and understanding, and a broad range of different interpretations of the various “churches” of technical analysis (examples – Elliott, Gann, Darvas, Guppy/Wilson, Williams, and a whole host of different classifications too long to list – chose the ones most people are familiar with from recent discussions).

Technical Analysis is as much an art as it is a science, since it is not scientifically robust in the conventional sense, and relies on the capacity of the individual to interpret the available information. Different methods have been devised out of using discrete combinations of techniques which are welded into schools of thinking.

So, I would argue that to really appraise any approach is problematic because there are so many variables to contend with. Individual capacity, a plethora of interpretations, competing criteria etc. I think at the core, if you believe that markets trend (the antithesis of random walk), and that trends can be detected and observed, then technical analysis could conceivably be viable. The next step though is to devise methods to determine the trend and devise strategies to take advantage of trends. This is where it gets tricky because over time different technical analysis “schools”/”churches” have developed.

An example of a division within a body of knowledge for example may be a “school” of Elliott Wave Practitioners who subscribe to Fibonacci extensions, and a “school” that either didn’t accept this component, or used a different increment (say a Gann styled eights and thirds approach for extensions and retracements). All schools though in this example may well agree on the basic concept of wave structures and labelling.

Then there may be other schools within the “Elliott” camp that do not agree on the labelling protocols, and have devised their own regimen. This is what revisionism is all about, taking a body of knowledge, and then revising portions of it to fit the individuals or “school’s” research and findings (often though trial and error in the market). The belief is that the original works, while they may be valued, are not considered perfect, and are not beyond modification.

What generally happens though is that most people incorporate pieces of knowledge depending on their makeup (some will be less willing to deviate, and others will be magpie like taking bits and configuring their own custom approach).

So when venturing into discussing “Gann”, it is important to recognise that the techniques pioneered by W.D. Gann spanned a lifetime, and that the original works while often coherent as units in themselves (although some of these are highly ambiguous) are not coherent as a complete body of knowledge. In fact it has been raised that Gann discarded much of his earlier works, or made significant modifications to them.

Part of the problem is that Gann did not leave a unifying comment or publish a holistic explanation of the body of works (that I know of – although people like Yogi claim that he did), which left more questions than it answered. This leaves the door wide open for a lot of speculation, revisionism, and interpretation. So, it becomes easy to rip pieces of Gann out of context, and make all sorts of claims and build a myriad of different approaches.

Hence using the term Gann is problematic. It is problematic because there are so many different perceptions about Gann, either from those people who have actually studied the works and those who haven’t. Those who haven’t often have a coloured view based on whoever they have come in contact with, or the materials they have had access too. This often leads to preconceived perceptions of what Gann is, and is often a false or greatly distorted view.

Within the broad group of people who have accessed any kind of Gann concept/material/revisionist knowledge, there are those who claim to be Gann guru’s/practitioners who have only studied a small component of the original works.

There is a broad cross section of people ranging (and I’m generalising here) from people who seem to be almost religious Gann “nutters” to people who adopt a particular style of Gann, and those that take specific components and techniques and incorporate them into their own approach. So, there can be a kaleidoscope of interpretations and revisionist points of view just within the group of people who have examined Gann.

So, it is within this understanding of the multifaceted nature of Gann as a body of knowledge, which is quite open to interpretation, that I will address Les’ comment on the use of the term “accuracy” in the next post to flesh out an interpretation of what is specifically meant to try to clear up some semantics. This will be within the context of the established backdrop of the problems with examining technical analysis broadly, and the perspective of the nature of different schools of technical analysis.



Magdoran

 

[lesm]

Pattern Analysis and the dilemma of uncertainty and probability:

With pattern recognition, I think all of us are making our best shot guess, whether we dress it up with algorithms based on moving averages, or if we use the “computer between our ears”.

A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?

The computer between our ears is very powerful and by learning and understanding market behaviour and the ability to identify patterns that are immediately discernable is within its capabilities. We have natural inbuilt neural network, we just need to learn to use it effectively. The more we look at something the more likely we are to run the risk of seeing what we want to see. What we see in the first couple of seconds (or less) of looking at a chart is most likely the correct interpretation.

The more we study patterns enables us to determine their reliability as a method for determining, which way the market or an individual stock might move. We can gather information, which we can use to develop a probalilistic mathematical model to reduce the guess work. Afterall, probability is a mathematical approach to dealing with uncertainty. We can refine and monitor the model through time, as there are no gurantees that a particular pattern will not fail through time or at particular times due to changes in market behaviour/dynamics.

I’d argue that analysis is (I suspect necessarily) subjective since it depends on the reasoning process of the individual, their capacity to observe (keenness of senses and mind, experience and access), environmental factors, the quality and quantity of information available to them, and the time available to process the information, including the will and committment to do so productively.

Magodran - I accidentally changed some of the words in the above quote.

A question here is that in performing analysis and developing methods aren't we attempting to move from the purely subjective approach to being more objective or if possible more quantitative, within reasonable bounds?

The more highly subjective the analysis is the more likely we have increased the risk of failed trades. Our testing should remove an element of the subjectiveness. Monitoring going forward should enable us to better quantify and confirm whether we have positive approach or not.

But in real terms, the analysis is only the starting point, as it is how we conduct and manage the trade once we are committed that is important.

I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
1. One subgroup would trade the system better than he could
2. One subgroup would trade the sytem at the same level as he could
3. One subgroup would trade the system worse than he could or make a loss.

A lot of time is spent on the initial analysis and time needs to be spent in looking at the overall approach, as analysis is not necessarily the point where we may lose the game. We can have a winning system, but still lose money.

The core question is “to what extent can we predict future events by studying and understanding the past”. It’s partly a history question along the lines of the concept that if we don’t learn from the lessons of the past, we are doomed to make the same mistakes in the future.

If you remember Bronowski’s “The ascent of man” BBC program, I remember the inspirational episodes where he talks about humanity standing on the brink of knowledge feeling forwards. I think trading is like this, we are standing on the brink of price action as it unfolds, feeling forwards.

Douglas talks about not having to know what is going to happen in order to make money if you are employing an edge. The primary problem of comparing different systems is that there is no objective standard to measure them by, only the current performance.

The term “past performance is no indication of future performance” comes to mind. What I’m getting at is that even the most robust predictive system in any field is often thwarted by reality. The rapid fall of France in 1940 seemed impossible until it happened, didn’t it?

So, what’s this all about? When researching past charts of indexes and commodities, there do seem to be patterns which seem to be repeated. The dilemma for me is that I do believe every moment in time (every event) is unique, and anything can happen. So, on this front I think we need to be flexible in our thinking, and I suspect that the creative side of the brain is better at imagining the future based on the plethora of subliminal observations we make.

But I do think that there is information imbedded in charts that can, if recognised, reveal clues about where the market might move to. Wave theories are about looking at the way markets seem to trend in many markets in many different eras. Statistics tries to collate past data to extrapolate the potential for future events to unfold.

I think that works like Heisenberg’s uncertainty principle, and the concepts underpinning quantum mechanics and chaos theory are near the mark about recognising the myriad of “tipping points” in events where many different possibilities, and their outcomes lead to what really happens.

You have posed an interesting question to which there are potentially a myriad of answers or views.

If we consider the market to be a dynamic system (breaking this down we could consider whether it is a linear or non-linear system) with a range of variables that affect its dynamics, can we then develop a model that would enable us to predict its behaviour with an acceptable level of confidence?

An interesting problem and due to there being a range of variables not a simple one. What is required is a simpler model that can use key variables, as well as the ability to self-learn.

Even if a 'fuzzy-logic' based approach is used, to maintain its effectiveness a capabilty would be required to add or remove facts through time. An interesting area of AI research.

Of course we know that chartists simplify the approach on the basis that all information currently known to buyers and sellers is reflected in the price and ignore any/all other information.

In simple terms, the futures markets are probably an easier environment to model as opposed to the stock markets.

In terms of comparing systems, without being able to identify a control to use as a reference point it will not necessarily be able to objectivley compare systems and consideration would need to be given to determining the time frame that the comparison would conducted over. As performance charateristics may change through time and be affected by market conditions and changes.

One would expect that any reasonably effective system should perform better than random to be claimed to have an edge.

Where I’m struggling is marrying the more orthodox statistics with a kind of quantum base. Some patterns work well in some markets and not others for instance, and then these patterns only work under certain conditions and in certain eras. I have a strong suspicion that the modern day orthodox regimen of back testing has a set of fatal flaws in it, and I am reminded of the logic behind George Soros’ reflexivity thesis about the division between perception and reality, and the whole notion of the self fulfilling prophecy.

The trick here is can you identify the elements where the methods complement each other and bring those elements together in a workable manner.

Reliable or effective testing will always be an issue, as well as the ability, knowledge and experience of individual testers.

But I have concerns with Frank’s sweeping certainty that he alone has the key to predict the future in the markets with his time approach, and that no other discipline can do this. While I respect the work he has done, and would like to study it more deeply, I still come back to this core dilemma, and wonder if he has solved it, or is like the rest of us using his version of the “art of the possible”.

There are an untold number of ways to trade the market and do it successfully. The danger with sweeping certainties is that it leaves the author open to challenge and the question of, can the method survive the long term or does it only work in a particular type of market environment or conditions. Only time will tell.

I suspect no one has a monopoly on forecasting time, and I suspect there are many different tools which are looking at the same thing, but I have no way to measure their respective accuracy (in part because of the uncertainly principle).

Agree. No one appears to have collared the market yet, but some do better than others.

Not sure if I waffled a littel bit, but think I caught most of the main.

I actually prefer whiteboards for discussing these type of topics.

Cheers
lesm

 

[lesm]

I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.

The good thing about that approach is that traders and investors can both use it.

Another one is the blindfold and pin, again fully shareable across both camps.

Cheers.

 

[Sean K]

Another one is the blindfold and pin, again fully shareable across both camps.
Cheers.

Funny, the Dart Board and the Astrologer regularly beat the financial wizards in the stock picking comps in the Sunday rags......

 

[Magdoran]

This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.

No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings

Les raised a good point; it would be so much easier to convey all these concepts visually with a white board. Since we don’t have that luxury of real time interactivity, the best I can do is to explain things as best I can. Also, this is in part why it is extremely difficult to get the message over in this medium.

Another point struck me recently when reading the Duc, tech and sails discussions on the trading the SPI thread when it came to Gann. Sails made some really salient point on this today.

I think that sometimes using a label can ascribe preconceived notions into a discussion, so let’s take all the emotion out of the word “Gann”, and focus on the areas I have an interest in which excludes the astrology component which I neither understand or practice (see Yogi for this).

My primary technical analysis influence is based on my interpretation of McLaren’s perspective of the market: essentially combining the geometry of the markets and vibration theory with a contextual interpretation of technical analysis patterns and wave theory.

Markets don’t tend to move in straight lines. They vibrate. Vibration theory works on two levels. There are vibrations/cycles running through all markets at all times, and then there are shorter term “vibrations” that have a more localised effect.

In straight technical analysis doctrine there are recognised technical patterns (e.g. Double tops/bottoms, gaps, reversal bars, islands etc). Some schools many have different interpretations of patterns (or use a form of exception handling with defined conditions which alter the interpretation of the meaning of the pattern) based on a contextual approach which modifies the taken for granted mainstream understanding.

In my discipline each pattern is considered in a dynamic contextual framework. It’s kind of like in chess when you use a combination of moves, the individual pieces move is considered in the context of the overall game, the same is true for particular patterns in context with other related patterns in different time frames, and recognising the sum of the whole when observing several patterns within a larger structure.

McLaren goes into a lot of detail about context. Here is a simple example as an illustration: The concept of “double bottoms” is commonly known. Most newbies learn that an underlying (stock or other) will rally from a double bottom (there are other notions some analysts venture like the range of the subsequent rally based on the price ratio to the first counter trend).

Within the context of a trend, McLaren places more emphasis on a double top in a downtrend, and double bottom in an uptrend. This is actually more far reaching than it might at first seem. Combine a whole host of these interrelated patterns in different time frames, and consider the potential for quite different interpretations to be made using a raft of revised conventions.

The use of the term “accuracy” seems to be a point of contention. I suspect this is partly due to semantics and different understandings based on different schools of discrete knowledge, and what is commonly known and understood by the term in one school, is radically different in another.

Ok, so in the next post I’ll go into detail on this subject in the context of the comments above.


Regards



Magdoran

 

[Sean K]

My primary technical analysis influence is based on my interpretation of McLaren’s perspective of the market: essentially combining the geometry of the markets and vibration theory with a contextual interpretation of technical analysis patterns and wave theory.

Markets don’t tend to move in straight lines. They vibrate. Vibration theory works on two levels. There are vibrations/cycles running through all markets at all times, and then there are shorter term “vibrations” that have a more localised effect.

Can you post some chart analysis with these 'vibrations' markets on them Magdoran? Or, is it just wave counts in Elliot?

Cheers,
kennas

 

[Magdoran]

This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.

No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings

Ok, let’s deal with the semantics and possible meanings when using the term “accuracy”.

For example, let’s look at the concept of the “accuracy” of price projections. This is based on the technique of using price range projections to estimate possible (probable) support/resistance in price for extensions and retracements.

For example Nick Radge was recently using this technique of projecting a range upwards to estimate probable areas of resistance in price for the XAO. He was using Fibonacci increments and used a method to establish exact price levels where he thought resistance might be met. Interestingly, Yogi did the same thing, but using Gann based increments. Both of them were not far off the mark in their estimations.

I have seen people use retracement and extension tools using specific methods well in advance of an event to identify support and resistance levels which have been hit almost (and sometimes) to the cent, and this ends up being a high or low in a drive (maybe a counter trend pivot). Given good technical analysis skills, the practitioner of this approach can forecast price levels in advance.

Certainly there is no guarantee the price projection will be right, but it is assessing where the underlying may reverse in a swing counter trend. This is where pattern recognition is key. The challenge for the practitioner is to assess the probability of where these areas are, based on their experience, and their understanding of how the underlying may trend.

The same kind of approach can be employed in projecting time points, but this is more involved since the pattern you are looking for is time based, and based on observable vibration patterns in the market. If people really want to know about this in detail, it is fully explored in McLaren’s Time Factor work. The charts I recently posted is an example of how this may work. Have a look at the charts, and see how the 24th of September is marked as a key date for Brent Crude (maybe even Light Crude too).

However, there are exceptions based on the pattern of trend, and there is the concept that “pitch can overcome support/resistance in time”. So, crude may not stop at this level based on time support in this case.

I have attached a Crude Oil chart as a working example of using the time approach. If pitch is too great, it will scream through my projected time support point. If it does this, it tells us a lot about the momentum of the trend. However, I though out of interest that I’d put the chart up and see how it goes.

I’ve identified two dates since the pattern could be a day out, but usually one date is sufficient +/- one trading day, but with this particular vibration, I could swing the overlay one more day forward and it still lines up, so there is some ambiguity by a day here. The two time points are markers of where I’d expect a trend/counter trend activity to occur, but a lot will be based on the patter. The 30th October is the next key date. Sorry, best I can do for today. But let’s see how this pans out.

The accuracy concept is not about the method working all the time, it doesn’t. It is like a moving average crossover (which is a trigger), bit projecting points is a little different. It is about assessing where support/resistance might be in time and price based on the evidence in the chart. When it works in the right circumstances (McLaren covers this in detail), the projections can be very accurate to the day, sometimes to the cent.

Let me make this clear though, it is usually the case (from my experience – some practitioners may do much better, or worse) that you can often only get either price or time projections from a pattern, and not both. It is rare to get a really good time and price projection, hence I’m often trading the time, or the price. When I project both, invariably one is wrong, while the other is close (if of course it pans out the way I thought it would).

Just think about it this way, if it doesn’t trend the right way, time to get out. If it does, like a tech blueprint, you have a battle plan for your trading of where to take profits. As you can see from the previous charts, it hit near my mark, then kept on going. I don’t have a crystal ball, but like in a battle, it’s about playing an educated hunch about the enemy’s strength and movements.

So, in reality I may realise I should take profits on a certain day, or at a certain price. Also, you can look at a pattern, and if it confirms a vibration project how the underlying might move, and set up failure criteria based both on pattern with price or time or both.

What people have to understand is that it is not 100% accurate. It never will be. The idea is that if you can get fairly accurate estimations though when you do get it right, and increase your overall expectancy using options for instance, you only have to really hit the big number 1-3 times out of 10, and cut the invalid versions often enough to get an overall positive result. You just can’t calculate what that will be, because there are too many variables. But I bet you tech’s system in choppy conditions like it has been isn’t living up to its bull market figures either…

Also, some people will argue that if you draw enough lines on a chart some will turn out to be a pivot. I don’t agree. I have worked with this kind of tool extensively, and in my best judgement I don’t think that these points are random. But I accept that some will not agree. It is really up to the individual to trial or not at their pleasure. It works for me, and for others who are significantly better practitioners than I am.

So, I hope that gives a different perspective on the term accuracy, which I think is often used in different context to mean quite different things.

Regards


Magdoran