Is T/A based on hope?

sails said:

Try this link to the ASX charting library. The articles are fairly short and to the point... http://www.asx.com.au/research/charting/library/index.htm

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That is a great intro to TA

thanks

MS

cuttlefish said:

Magdoran,

Thanks for the replies and for tolerating my slightly sarcastic post in response to comments from others.

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You’re welcome, and thank you for your ongoing thoughtful posts which I find well worth reading.

cuttlefish said:

I suspect I'll be doing a mixture of both trading and investing in the future and am in the process of figuring out how mentally to separate the two because trying to invest and trade the one stock at the same time definitely doesn't work.

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You know, it is possible to do both, and at the same time. But it isn’t easy at first. You can have a leveraged major position with a long term time frame, and use this as a base to effectively “trade from” by using a range of hedging strategies, or trading strategies. This of course depends on your personal goals and risk tolerance and knowledge levels, but I assure you, there are ways to do this – just something to consider.

By the way, in my world, T/A and F/A go hand in hand. I’m primarily T/A orientated, but get very good F/A advice as often as I can. In fact I work best with a good F/A ally doing the groundwork research while I do the precision work for timing and price points – this can work really well. Maybe you have a gift for F/A, but knowing how T/A works can be an advantage... perhaps go with your feelings...


Anyway, I’ll be out of the country for a few days, but I’ll try to answer any questions when I get back.


Regards


Magdoran

wayneL said:

FWIW, most of the posts in this thread are great, but a couple need to be asked a similar question at some point in the future maybe... In most humble opinion.

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Well Wayne, I'm not sure I'm understanding everything you're saying there ... but I find it much easier to cop direct criticism and take it on board than having someone skirt around a subject, thats for sure.

Now, being paranoid I took Bobby's post to be directed at mine, because it was a couple of posts after mine. Now maybe he wasn't directing his comments at me - but I do note that I used the phrase 'predetermined exits' and you have just discussed the impossibility of predetermining market behavoiur. What may have happend here is that my comment was misconstrued to thinking I meant it was possible to predetermine what the stock price was going to do after entry and then exit at that price - which of course it isn't, which is why its essential (to my mind) to have an exit plan prior to entry.

As I've said many times I'm not a T/A but I'm assuming that when entering a trade a T/A does so because they believe there is a greater probability of the price doing one thing than another and they are betting in favour of the greater probability. When I said having a predetermined exit strategy is important I didn't mean having a predetermined exit price, I meant having a plan for exiting the trade unemotionally - which is best done by putting the plan in place prior to entry because once entered emotions can take over and effect that exit plan.

The exit plan would need to cater for both the favourable and unfavourable outcomes, and it can include all sorts of twists and caveats, as long as they are unambigous ones so that once in the trade the plan can be executed unemotionally.

Now if Bobbies and your comments had nothing to do with my post then I've just babbled on a bit more lol.

Is it hope or belief? Or does belief represent hope?

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Anyone?

cuttlefish said:

...but I do note that I used the phrase 'predetermined exits' and you have just discussed the impossibility of predetermining market behavoiur. What may have happend here is that my comment was misconstrued to thinking I meant it was possible to predetermine what the stock price was going to do after entry and then exit at that price - which of course it isn't, which is why its essential (to my mind) to have an exit plan prior to entry.

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There is a big difference between predeternined exits and predetermined market behaviour.

One says - if ===> then

There other says - the market "will"

The first one is good practice - if the market does this, then I do that.

The second one is shocked when the market blows up their scenario.

FWIW

cuttlefish said:

.

Now, being paranoid I took Bobby's post to be directed at mine, because it was a couple of posts after mine. Now maybe he wasn't directing his comments at me -

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Hello Cuttlefish,

No it was'nt directed at you, but when one is , you will sure know it

Have Fun
Bob.

Snake Pliskin said:

Anyone?

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If belief encompasses hope, to what extent does that render the trader useless when the trader has full belief in their analysis?

Feel free to discuss everone, don`t let WL`s socratic thoughts dissuade you from posting.

Bobby said:

Hello Cuttlefish,

No it was'nt directed at you, but when one is , you will sure know it

Have Fun
Bob.

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heheh - I'm sure I will lol.

Snake Pliskin said:

If belief encompasses hope, to what extent does that render the trader useless when the trader has full belief in their analysis?

Feel free to discuss everone, don`t let WL`s socratic thoughts dissuade you from posting.

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It seems a perennial question.

Snake Pliskin said:

It seems a perennial question.

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I am even stronger with my conviction. Perennial!

Snake Pliskin said:

I am even stronger with my conviction. Perennial!

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Good Evening Snake,

The problem with T/A these days is so many use it , that ambushes are easy to set because the levels the rabbits are going to act on scream out :bunny: :bunny:

Have Fun
Bob.

Bobby said:

Good Evening Snake,

The problem with T/A these days is so many use it , that ambushes are easy to set because the levels the rabbits are going to act on scream out :bunny: :bunny:

Have Fun
Bob.

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Thank you Bob

The only way to profit systematically and consistently from the markets is to have a method – whether simple or complex – that locates, and exploits, a statistically significant (non-random) bias in price movements, beyond the point of overcoming costs. Of course it is possible to have a method of entries and exits that delivers such a positive edge, but not be aware of this underlying mathematical principle. I suspect that this is the case with many successful traders.

Proper sizing of positions is worthless if one doesn't have this edge. The best money management can achieve is to merely slow one's descent into bankruptcy. The same applies with psychology: if an edge from entry/exit method is absent, applying all of the discipline in the world is to no avail. The notion that trading is "all about mastering oneself" makes some tenuous assumptions.

The maxims "trade with the trend", "cut losses short" and "let profits run" all suppose that prices "trend" ( i.e. that rising prices will – on balance of probability – continue to rise, and falling prices will continue to fall), and can succeed only to the extent that this "trending" occurs. If, hypothetically speaking, price movements were a random walk, then there would be no technically based system capable of beating the markets mathematically, just as there is no system capable of beating the house at Roulette. Any winning streak, no matter how long its duration, would be nothing more than fortuitous, and such "luck" is not sustainable indefinitely.

So to answer the original question: "is T/A based on hope?" The antithesis to hope is definitive mathematical expectation. Given that, unlike casino type games of chance, market probabilities can not be calculated with mathematical accuracy, the best we can do is to evaluate a suitable historical sample of either price movements, or a trading record of wins and losses, and apply the appropriate tests of statistical confidence.

Regarding two analysts interpreting the same chart differently, it again comes down to the presence of a historically significant bias in the price movements, and the assumption that this will, in the immediate future, repeat itself with similar probability. So it is possible for both analysts to be "correct", in so far as it is possible to make statistical statements of correctness in a "game" where (as the disclaimer, even if used out of context here, so aptly states) "past results offer no guarantee of future performance".

Well done Hanover, I agree with you.

There's one thing you missed though. Trading does require skill. It is not a science and can not just be learned and practised to a set of rules (say like Blackjack systems) to achieve great results.

There is no set in concrete Trading methodology or system that consistently makes good profits, if there was everyone would use it of course.

The difference between a great trader and one that loses money is not just the methodology but the Trader themselves.

Common sense, feel for the market, fundamental knowledge, luck, discipline, quick thinking, breaking rules when necessary, etc. etc. all play a part.

Realist said:

Common sense, feel for the market, fundamental knowledge, luck, discipline, quick thinking, breaking rules when necessary, etc. etc. all play a part.

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A technical edge wouldn't include fundamental variables, since backtesting (whether paper trading or mechanical) the idea wouldn't include them. If you start to include them trading live, then you defeat the purpose of ever testing your edge in the first place, and it then becomes a useless exercise.

Including variables that you didn't include in backtesting would only increase stress and probably analysis paralysis.

Discipline is about all you need once you have a tested edge. This includes SEPARATING new ideas from live trading, something I've fallen victim to.

Realist said:

Well done Hanover, I agree with you.

There's one thing you missed though. Trading does require skill. It is not a science and can not just be learned and practised to a set of rules (say like Blackjack systems) to achieve great results.

There is no set in concrete Trading methodology or system that consistently makes good profits, if there was everyone would use it of course.

The difference between a great trader and one that loses money is not just the methodology but the Trader themselves.

Common sense, feel for the market, fundamental knowledge, luck, discipline, quick thinking, breaking rules when necessary, etc. etc. all play a part.

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Of course Realist has all the qualifications to teach trading - like most black box salesmen he don't do it , he don't believe it can work, and will only pay tax on a real job.

NettAssets said:

Of course Realist has all the qualifications to teach trading - like most black box salesmen he don't do it , he don't believe it can work, and will only pay tax on a real job.

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Haha, I've never professed to be able to teach Technical trading.

But I know enough about it to know it's pro's and cons. And therefore comment on it. And knowing its Cons deters me from doing much trading.

It's like playing Blackjack, I know the systems, I know how it works, and I do it for fun once in a while, cause I know the Cons outweigh the Pros.

I have traded a few stocks recently, not sold any yet though. Hahaaa.

I just can't bring myself to sell something easily, its against what I believe in.

I'm holding as trades CQT, FDL, MTN, HCY and NEL.

I've made more money from MRE recently than them combined though, MRE was a fundamental investment.

I believe people can make money from Trading of course, I just don't think over the longterm after all expenses they make as much as diversified value investing and holding.

Realist said:

I have traded a few stocks recently, not sold any yet though. Hahaaa.

I just can't bring myself to sell something easily, its against what I believe in.

I'm holding as trades CQT, FDL, MTN, HCY and NEL.

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That's not trading, that's simply buying some stocks, and you've now let them get away. Trading would be cutting your losses, since the trade didn't go as planned.

I hope you haven't risked much.

swingstar said:

Discipline is about all you need once you have a tested edge. This includes SEPARATING new ideas from live trading, something I've fallen victim to.

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Like that state'ment Swingstar, I still can't help doing it

Bob.

Realist said:

Well done Hanover, I agree with you.

There's one thing you missed though. Trading does require skill. It is not a science and can not just be learned and practised to a set of rules (say like Blackjack systems) to achieve great results.

There is no set in concrete Trading methodology or system that consistently makes good profits, if there was everyone would use it of course.

The difference between a great trader and one that loses money is not just the methodology but the Trader themselves.

Common sense, feel for the market, fundamental knowledge, luck, discipline, quick thinking, breaking rules when necessary, etc. etc. all play a part.

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Wow, Realist! Now you're an expert trader as well as a devoted fundamentalist. Now if you can just turn your expertise to tax, self managed super funds, superannuation in general, managed funds etc etc......., we will all become redundant on this forum.

Just don't know how you cope with knowing so much and being so good at everything.

Julia