Can I trade mostly based on technical analysis?

This is a discussion on Can I trade mostly based on technical analysis? within the Forex forums, part of the Markets category; Originally Posted by wisefoolx OOO becareful you'll soon find half a dozens trollers jumping outthe woodwork screaming " PROVE IT ...

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Old Sep 15, 2017, 12:37pm   #61
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OOO becareful you'll soon find half a dozens trollers jumping outthe woodwork screaming " PROVE IT PROVE IT ! " LOL.
We all know you can't prove it.
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Old Sep 15, 2017, 12:59pm   #62
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AHHHHH , prove it prove it .
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Old Sep 15, 2017, 1:02pm   #63
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AHHHHH , prove it prove it .
Yes, this is called scientific method. You are scientific, no ?
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Old Sep 17, 2017, 9:52am   #64
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Technical analysis based trading is actually comprised of two components - technical analysis (left hand side of the chart) and trading (the right hand side of the chart). The former is where you take all the technical analysis of historical price action to determine your trade plan. The quality of your analysis is a relevant determinant of your win/loss ratio over a statistical meaningful population size. Your win/loss ratio cannot be assumed but can only be established by your actual performance over time. I used the word "relevant: because the other important component is trading itself and is about entry, trade management and exit and they are predominantly linked to trade psychology. Your success or failure as a technical trader is your ability to marry the two consistently. It is easier said than done.

What has been raised as a question on this thread is whether technical analysis is sufficient and by that I assumed it means whether one can be consistently profitable using technical analysis only. I think if you look hard enough you will find examples to justify whatever position you wish to take. However what is important and meaningful for each trader individually to address is whether technical analysis is taking you where you want to go with your bottom line. Sadly we know the success rate is very low. Trading is hard. You need to build on your strengths and work on your weaknesses. It requires discipline and hard work.
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Old Sep 17, 2017, 10:11am   #65
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Welcome back Brumby. Sensible stuff.
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Old Sep 17, 2017, 10:38am   #66
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It requires discipline and hard work.
Discipline in what and hard work in what ? If I do 10 push-ups a day, will my profits go up ?
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Old Sep 17, 2017, 12:23pm   #67
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A fit and healthy body helps towards a fit and healthy mind and a positive attitude.
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Old Sep 17, 2017, 12:34pm   #68
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Welcome back Brumby. Sensible stuff.
Thanks.

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Discipline in what and hard work in what ? If I do 10 push-ups a day, will my profits go up ?
Good question. Trading discipline as someone used to describe it is the ability to follow the plan. It is often mentioned that it takes around 10 years or 10,000 hours of practice to reach the top of any performance fields. This requires hard work.

Trading is essentially counter intuitive to our human dna. For example, its is generally accepted that the trend is your friend until it ends. This means, in an uptrend we buy high to sell higher if we are yo make money. Unfortunately we are generally geared to buy low to sell high. This means an intrinsic habit of picking tops and bottom and trading against the trend - which is a low profitable practice. It requires discipline and hard work to change such mindset through repetitive behavioural modification.
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Old Sep 17, 2017, 12:44pm   #69
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Good question. Trading discipline as someone used to describe it is the ability to follow the plan. It is often mentioned that it takes around 10 years or 10,000 hours of practice to reach the top of any performance fields. This requires hard work.

Trading is essentially counter intuitive to our human dna. For example, its is generally accepted that the trend is your friend until it ends. This means, in an uptrend we buy high to sell higher if we are yo make money. Unfortunately we are generally geared to buy low to sell high. This means an intrinsic habit of picking tops and bottom and trading against the trend - which is a low profitable practice. It requires discipline and hard work to change such mindset through repetitive behavioural modification.
How do you work out your plan is worth following ? If you do have a plan worth following, can anyone follow it and win ?

Everywhere I look, I can see people buy high sell low and they have broker statements or call outs to prove it. Clearly it is not their intrinsic habit to buy low sell high. So I don't know where you are getting that idea from.

For instance, I can ask tomorton to call out a trade. Invariably he will end up buying high, selling low. Why ?
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Old Sep 17, 2017, 4:24pm   #70
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Its surely a record? - 1,444 posts - and all of them negative.
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Old Sep 17, 2017, 8:37pm   #71
 
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A spade is a spade.

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Its surely a record? - 1,444 posts - and all of them negative.
Tommo you are too polite. The vast majority of his posts are utter bollox.
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Old Sep 17, 2017, 11:21pm   #72
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Its surely a record? - 1,444 posts - and all of them negative.
Maybe you are not observant. I am absolutely positive on people buying high selling low. You can demonstrate otherwise if you like.
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Old Sep 17, 2017, 11:25pm   #73
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How do you work out your plan is worth following ?
Simple. When you have done enough trades (statistically meaningful) to establish whether your trade plan is worth following.

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If you do have a plan worth following, can anyone follow it and win ?
Not necessary. Studies have demonstrated that traders following the same trade plan will get different outcomes. The trade psychological profile is unique to each trader and accounts for the different results.

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Everywhere I look, I can see people buy high sell low and they have broker statements or call outs to prove it. Clearly it is not their intrinsic habit to buy low sell high. So I don't know where you are getting that idea from.
Frankly traders do all kinds of silly things. We all have our own fair share of them. I have no intention to discuss at length what they might be. At the end of the day it is the sum of all the outcomes and the simple maths associated with the concept of trade expectancy. Profitable traders have positive trade expectancy and non profitable traders have negative. Our trade results are a function of our trade performance in two key measures - our win loss ratio and our risk reward ratio. Generally the problem with most traders is the inability to manage the risk reward ratio favourably. The golden rule of trading is in "pressing your winners and cutting your losses". Easy to say but extremely difficult to achieve. A 2016 research report released by FXCM based on their retail clients over a 15 months period demonstrates this fact clearly. Across all currency pairs, their clients were able to achieve an average of 50 % win loss ratio. The problem is in risk reward and was consistent across all currency pairs. For example, in the EURUSD pair traders were taking in less than 60 cents for every $ loss. In the GBPUSD pair it was only 50 cents to the $.

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For instance, I can ask tomorton to call out a trade. Invariably he will end up buying high, selling low. Why
Are we discussing trading or clairvoyancy? Making judgement on one trade or even 10 trades is meaningless in my view because it is statistically insignificant.
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Old Sep 17, 2017, 11:34pm   #74
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Simple. When you have done enough trades (statistically meaningful) to establish whether your trade plan is worth following.
How many trades would be statistically meaningful ? Suppose the number is X. Why would anyone following the plan between trade number 1 to trade number X - 1 ?
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Old Sep 18, 2017, 12:24am   #75
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How many trades would be statistically meaningful ? Suppose the number is X. Why would anyone following the plan between trade number 1 to trade number X - 1 ?
If X is a known number then performing X-1 trades is self defeating because a statistically meaningful result has not been achieved. If X is unknown then the question itself is rhetorical in nature.
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