On why traditional tech analysis stopped working and on when it shall start again...

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

No I'm not taking it personally.

I'm attempting to look at it objectively.

I see little evidence that technical analysis in its broad sense no longer works.
He has only presented his limited studies. I'm really interested in seeing how he
has been able to draw such a broad conclusion.

If that is the case why then is he pedalling his software?

---TSI is the filter that allows it to work??--It switches it back on??

 

[Habakkuk]

Re: On why traditional tech analysis stopped working and on when it shall start again

I see little evidence that technical analysis in its broad sense no longer works.

tech, please don't take my comments personally either. I respect and am impressed with your abilities. But what you are doing today is a long way from the TA that you have learnt in your ATAA course in the 1990's. That was textbook TA mostly based on Edwards and McGee, et al. but you are now trading fully discretionary. Of course you still use some of the principles but not in a strict textbook way. You have also recently discovered that your techniques can't be programmed because they rely on your judgment/intuition/experience/etc.

When people say that TA no longer works, they are not attacking you. They just point out that traditional indicators and patterns no longer work. I would go further and say they never really did. Not quite true because new discoveries always work for a while. But any popular (or even unpopular) indicator cannot really "make money". Not consistently.
Who would want to take the other side of those winning, "make money" trades? I'm not looking for an answer here.

Which brings me to the real point of this post. I'm shocked and saddened that nobody has responded to my question about Price Action Lab, so I'm going to make it easier. It has a brute-force algorithm that tests the profitability of 6-bar patterns over a time-series, looking for a specifiable win rate and minimum profit. There is no intelligence involved. Real 1990s software. The patterns are randomly generated permutations of OHLC over the 6 bars (it can be fewer or up to 9 bars in the gold version). E.g. today's low must be higher than the high from 3 days ago and yesterday's close must be above the open 5 days ago, etc. There are an astronomical number of possible patterns that can be generated and tested.

Michael Harris preaches about the futility of data-mining. Isn't this ultimate D-M , though?
More interestingly, could such 90% patterns show some persistence in the future? That's what I's like to find out. Without spending any money.

Any opinions? Please.

 

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

When people say that TA no longer works,

Why is it that people think I'm taking this personally.

I use T/A I use it often trading the DAX.
I've been using it for 20 yrs.
I find Support and Resistance a re occurring phenomenon which
I cant imagine trading without.

I developed and traded a System live from 2002 to 2007
and turned $30,000 into $360,000 before shutting it down.
Its been published.

All after 1980.

If Technical Analysis no longer works then I WANT TO KNOW!

This thread is titled

On why traditional tech analysis stopped working and on when it shall start again

Terrific

I get that TSI evidently keeps you on the right side when trading Technically---but does that mean that it works now?.
Everything I've read (That's been offered) is just thin on evidence. You've got this massive statement supported by one piece of evidence---and that's pretty rudimentary.

If T/A doesn't work then buildings full of Quants will be devastated.
You wont be able to sell a charting package.

Its been mentioned that conventional T/A doesn't work---that's a lot of T/A
Pleeeeze show me where this has been proven.

I want to know more I really do-- But evidence based---not just a statement--and flimsy singular case study.

As for the software
It has 2 rules
Then randomly generates patterns inside those rules.
using 6 to 9 bars.
Other than amusement value what is it doing.
Price will either move above,stay stagnant or fall.---from what I see.
The patterns within the rules have no criteria for qualification so how can they be used in the future?

 

[Boggo]

Re: On why traditional tech analysis stopped working and on when it shall start again

. There is no intelligence involved. Real 1990s software. The patterns are randomly generated permutations of OHLC over the 6 bars (it can be fewer or up to 9 bars in the gold version).

Any opinions? Please.

I've got a few but I apart from one I shall refrain.

When a procedure operates on six bars, but nine in the gold version we are highlighting why over complicated crap gives TA a bad name.

 

[Habakkuk]

Re: On why traditional tech analysis stopped working and on when it shall start again

tech, people think you're taking it personally because you become defensive. That's my impression.

But I don't want to dwell on that. As I said my post above was just an excuse to get some opinions about this Price Action software. It would seem that I have been too optimistic in that regard. Thanks, Boggo for your view.

I'm not sure if your whole reply is even meant for me. It doesn't look like it. I had never heard of TSI before sinner's post and know nothing about it. I certainly didn't refer to it.
And I don't know what statement this is about:

You've got this massive statement supported by one piece of evidence---and that's pretty rudimentary.

One of my statements could probably be called sweeping (not sure about massive) but I didn't offer any evidence. I can only conclude that you are still responding to the OP, sinner, who is responsible for the provocative thread title.

Please let me know, tech, if you seriously want to know about research into the effectiveness of TA indicators and patterns.
I've read heaps of that stuff over the years but it would take me some time to dig it up.
It needs to be pointed out that this does not generally include discretionary analysis because that's not quantifiable. Therefore "support" and "resistance", being somewhat subjective notions, are not considered. Neither is anything along the lines of Gann or Elliott Waves. But Fibonacci numbers are researched and shown to have no predictive value. Likewise common patterns like head and shoulders, triangles, flags etc. From memory, double tops/bottoms show a slight edge.

I hope that you are not really serious about this anyway, not just because it will save me some work, but if you were serious, you could relatively easily find those studies yourself. They almost always contain references to further studies along similar lines.

And finally, as you would be aware, it's "impossible" to prove a negative. Some people might want proof that TA does work. I don't. Although not wanting the last word, I hope we can leave it at that.

 

[howardbandy]

Re: On why traditional tech analysis stopped working and on when it shall start again

Greetings --

At the risk of stepping into a street fight, I hope these comments are helpful ---

We are using technical analysis (as well as other techniques), as tools that provide buy and sell signals for stocks, futures, currency, funds, etc. The metric for whether technical analysis works or does not is whether the trades obtained using those tools are profitable beyond the in-sample development period.

One of the aspects of technical analysis that has changed significantly between the beginning (which I will put in the 1980s) of technical analysis and the present is the length of time that data series and associated derivatives and indicators are stationary. Stationarity is a requirement for all forecasting. In order for rules based on previous data to be useful in estimating / predicting the future, data used to determine those rules must have the same distribution for the entire period -- in-sample / backtesting / learning through out-of-sample / validation / trading.

If it appears that a particular trading system has lost its edge, it may be that the period of stationarity has changed.

I posted a YouTube video of a presentation entitled "The Importance of Being Stationary" that I made to the Seattle, Washington, Market Technician's Association meeting a few months ago. Here is a link to it:
https://www.youtube.com/watch?v=iBhrZKErJ6A

Best regards,
Howard

 

[grah33]

Re: On why traditional tech analysis stopped working and on when it shall start again

you lot still look for triangle patterns, and double tops/bottoms etc. , and other patterns, right??

 

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

you lot still look for triangle patterns, and double tops/bottoms etc. , and other patterns, right??

Read The above from Howard

Then spend a few hrs here

http://thepatternsite.com/index.html

Then If you think you can do it without doing what Howard says
Go here and do 20 of these.

http://www.chartgame.com/

 

[KnowThePast]

Re: On why traditional tech analysis stopped working and on when it shall start again

Read The above from Howard

Then spend a few hrs here

http://thepatternsite.com/index.html

Then If you think you can do it without doing what Howard says
Go here and do 20 of these.

http://www.chartgame.com/

Interesting, just did 10 of those and beat by and hold in 9 of them.

This is without any knowledge of charting whatsoever.

 

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

Interesting, just did 10 of those and beat by and hold in 9 of them.

This is without any knowledge of charting whatsoever.

Now do it as if you could only go long.
That cuts out short and CFD's
How most trade stock

Maybe a change of analysis styles KTP?

 

[KnowThePast]

Re: On why traditional tech analysis stopped working and on when it shall start again

Now do it as if you could only go long.
That cuts out short and CFD's
How most trade stock

Maybe a change of analysis styles KTP?

Nah, once I add in experience and knowledge, I will shoot myself in the foot.

 

[mazzatelli]

Re: On why traditional tech analysis stopped working and on when it shall start again

What about using traditional tech/a in non traditional approaches?

Like creating your own custom index that tries to track beta using say k-means clustering and then taking the moving average of your index vs. MA of market you're tracking e.g. S&P500. Rather than just throwing MA on a security and "read" its price action.

 

[Modest]

Re: On why traditional tech analysis stopped working and on when it shall start again

Read The above from Howard

Then spend a few hrs here

http://thepatternsite.com/index.html

Then If you think you can do it without doing what Howard says
Go here and do 20 of these.

http://www.chartgame.com/

Awesome game thank you for sharing!

 

[craft]

Re: On why traditional tech analysis stopped working and on when it shall start again

Has anybody read this book?




Here’s an Active Trader interview to give you some insight about the book and author.

http://invivoanalytics.com/wp-content/uploads/2008/03/ARONSON_200702.pdf


The second pdf on the website about Monte Carlo Evaluation is very good IMO and should be minimum understanding for people relying on back testing to support their TA assumptions.

http://www.evidencebasedta.com/

 

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

Has anybody read this book?
View attachment 63274
Here’s an Active Trader interview to give you some insight about the book and author.
http://invivoanalytics.com/wp-content/uploads/2008/03/ARONSON_200702.pdf
The second pdf on the website about Monte Carlo Evaluation is very good IMO and should be minimum understanding for people relying on back testing to support their TA assumptions.

http://www.evidencebasedta.com/

Yes both Kris and I
Kris has I'm in the middle of it.

 

[Habakkuk]

Re: On why traditional tech analysis stopped working and on when it shall start again

Has anybody read this book?

I've read it, all 450 pages of it. Not for people with a short attention-span.
Also best avoided by true believers in TA.

 

[satanoperca]

Re: On why traditional tech analysis stopped working and on when it shall start again

Does T/A work? Yes
Is anyone going to share their profitable strategy? No. Why would they? Most spend year studying, praticing and refining their skills. Cannot go to the doctors or accountants without paying. With the exception on Tech/A and Nick Radge who offer their experiences and knowledge in most cases free. I am one who has benefited from their insights and are appreciative that they continue answering newbies questions.

T/A requires both left and right brain analysis, which few people posses.

Cheers - still on the side lines waiting to get back in the markets - short side player only

 

[howardbandy]

Re: On why traditional tech analysis stopped working and on when it shall start again

Hi Satanoperca --

There are several profitable trading systems fully disclosed in my books and presentations as examples of the results possible through use of high quality modeling and simulation techniques. Some are in the free chapters. You will need to read the book for others.

Begin here and read the free chapters:
http://www.meanreversiontradingsystems.com/book.html

And these free chapters:
http://www.quantitativetechnicalanalysis.com/book.html

Here, for some background:
https://www.youtube.com/watch?v=iBhrZKErJ6A

Or here, for more information:
http://www.blueowlpress.com/WordPress/

Recordings of my presentations at two of the ATAA Annual Conferences are among the videos.

Also search Aussie Stock Forums for my postings.

Best regards,
Howard

 

[howardbandy]

Re: On why traditional tech analysis stopped working and on when it shall start again

Does T/A work? Yes

Cheers - still on the side lines waiting to get back in the markets - short side player only

Greetings --

For tradables that have price series that are not symmetric in terms of upward price changes and downward price changes, it is more difficult to develop and trade short / flat than long / flat.

Drops in price are of shorter time duration and steeper slope, and tops are less well defined than bottoms. With equities, there is an upward bias in price due to productivity, inflation, population, resource extraction, government activities, etc. In some circles, being short is considered to be unpatriotic. All together, it is easier to be profitable trading long / flat than short / flat.

Short / flat traders do have one significant advantage -- being short is less risky than being long.

Best regards,
Howard

 

[tech/a]

Re: On why traditional tech analysis stopped working and on when it shall start again

Has anybody read this book?

View attachment 63274


Here’s an Active Trader interview to give you some insight about the book and author.

http://invivoanalytics.com/wp-content/uploads/2008/03/ARONSON_200702.pdf
The second pdf on the website about Monte Carlo Evaluation is very good IMO and should be minimum understanding for people relying on back testing to support their TA assumptions.

http://www.evidencebasedta.com/

Craft
Have you read it?
What is your feedback?

This is----in my opinion applicable to all forms
Of analysis.