Reading for the rest of us:
LINK:
http://mathinvestor.org/2018/04/the-most-important-plot-in-finance/
Posted by Tony Moore
LINK:
http://mathinvestor.org/2018/04/the-most-important-plot-in-finance/
Posted by Tony Moore
The Truth (not the fish)about TA and why TA is promoted ...but not used by professionals!
- Thread starter tom
- Start date
Interesting but I don't see the part where it says that it's not used by professionals
I understand that it may not work all the time that's why I have given up on TA a long time ago but I think those professionals that do believe in it I believe they use it or at least they have someone on their staff analyzing the charts and probably looking at more than one metric but when it's presented to an audience it's usually simplified so an average trader trying to do the same thing will most likely not have as good of a result as the professionals
One of the things I don't like about TA is that it's mostly backward looking so looking at a certain pattern it's easy to see where you should have gone long or short but you have to wait for the pattern to complete before you do anything and even than it my not always work out
I understand that it may not work all the time that's why I have given up on TA a long time ago but I think those professionals that do believe in it I believe they use it or at least they have someone on their staff analyzing the charts and probably looking at more than one metric but when it's presented to an audience it's usually simplified so an average trader trying to do the same thing will most likely not have as good of a result as the professionals
One of the things I don't like about TA is that it's mostly backward looking so looking at a certain pattern it's easy to see where you should have gone long or short but you have to wait for the pattern to complete before you do anything and even than it my not always work out
I did not say it doesn't work I just don't use it because I find it unreliable
Here is a post by someone else who mentions Adan H Grimes
Adam Grimes has covered this issue quite well. The webinar he did for IB in February 2013, for example, shows how moving averages and Fibonacci have no statistical edge. If you really want to continue your Taleb inspired education then read Antifragile. by ACS
This is an excerpt from his book in chapter 11
There are many, many examples of pattern failures and discussion of the decisions that might have been made at various points in the trade’s life cycle. A trade is a process, not an event: from context to entry trigger to trade
management, every part of the process must be mastered.
So if you are comfortable and believe in TA by all means use it It's just not for me I don't trust it
This also contradicts the idea of the title of this post that those that promote TA don't use it
Here is a post by someone else who mentions Adan H Grimes
Adam Grimes has covered this issue quite well. The webinar he did for IB in February 2013, for example, shows how moving averages and Fibonacci have no statistical edge. If you really want to continue your Taleb inspired education then read Antifragile. by ACS
This is an excerpt from his book in chapter 11
There are many, many examples of pattern failures and discussion of the decisions that might have been made at various points in the trade’s life cycle. A trade is a process, not an event: from context to entry trigger to trade
management, every part of the process must be mastered.
So if you are comfortable and believe in TA by all means use it It's just not for me I don't trust it
This also contradicts the idea of the title of this post that those that promote TA don't use it
Donald
New member
Quite so....the article also reminds me of Mr Harris' work: http://www.priceactionlab.com/Blog/the-book/
J
JohnP2
Guest
I read that article when it first came out and thought it was very good. I especially liked this part:
"Also, consider the following: Numerous quant funds and other organizations at the forefront of modern quantitative finance employ highly sophisticated mathematical algorithms (much, much more sophisticated and extensive than anything ever used in the TA world), with huge dynamic datasets, implemented on state-of-the-art large-scale computer equipment, and trading at millisecond and even microsecond levels. These computer programs mine every single morsel of real statistical information that they can find in a continual search for “alpha.” Furthermore, these competing quantitative programs are engaged in a very real “arms race,” because any strategy that produces statistically nontrivial profits is quickly mimicked by other programs from other organizations, with a result that any edge enjoyed by one firm or by one computer program evaporates rather rapidly. Indeed, this “war” partly explains why the resulting market price stream is almost entirely a random walk."
To those thinking they can join a trading chat room, build short-term retail trader algos or otherwise use TA or even "simple price action" to "trade for a living" ... good luck...and don't quit your day job.
The only long-term TA strategies I've seen that work at all are simple, very long-term momentum strategies. Most of these perform about the same as buy-and-hold but cut risk/drawdowns by avoiding parts of bear markets. They also get whipsawed during short-term corrections, though.
I have not read Michael Harris' "book" but Kevin Davey wrote about the possibility of finding one profitable technical trading system for every 100-200 that I may attempt to develop. I view this as the TA challenge. Useful methods may be out there but it's really difficult (and beyond the capabilities of most of us due to inadequate statistical and/or coding knowledge) to find them. In the meantime, so many retail traders willy-nilly (not to be confused with "dilly dilly") click on this or that indicator and believe we are looking at actionable information. Some of this may have been actionable in the recent past and may continue to be actionable for a time until the luck runs out.
J
JohnP2
Guest
True, and Davey's "profitable" methods (which I'm sure did well in backtesting) haven't been profitable in real-time, at least those I've seen. Someone in a Market Wizards book said something similar to Davey--I believe it was "There are a million profitable ways to trade, and all of them are extremely difficult to discover." If anything, it's much harder to find profitable trading methods now than in the Market Wizards era (1970s-1980s). If you had a strong math/IT background or were willing to calculate indicators by hand, things like the Turtle trading method worked well back then. Now every retail trader has access to much more data/systems, and hedge funds, serious algo traders and HFT guys are on a completely different level altogether.
Donald
New member
A good discussion...the "always grumpy"
[/URL] Michael Harris put another blog post up on this theme (focusing on trend-lines this time) a few days ago:
source: http://www.priceactionlab.com/Blog/2018/05/charts-trading-strategy/
source: http://www.priceactionlab.com/Blog/2018/05/charts-trading-strategy/
J
JohnP2
Guest
A good discussion...the "always grumpy"[/URL] Michael Harris put another blog post up on this theme (focusing on trend-lines this time) a few days ago:
View attachment 2539
source: http://www.priceactionlab.com/Blog/2018/05/charts-trading-strategy/
Great article! I always thought it was funny to watch traders argue about trendlines in forums. "Your trendline strategy didn't work because you should connect 3 low points, not 2," etc. It's kind of like Elliot Wave "analysis." Ask five Elliot Wave followers which wave the market is currently in, and you'll get 5 different answers