TA debunked?

This is a discussion on TA debunked? within the Technical Analysis forums, part of the Methods category; Originally Posted by DionysusToast It's pretty simple to understand what is wrong with textbook technical analysis. First, two important elementary ...

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Old Jul 20, 2012, 8:47pm   #22
 
Shakone's Avatar
Joined Feb 2009
Re: TA debunked?

Quote:
Originally Posted by DionysusToast View Post
It's pretty simple to understand what is wrong with textbook technical analysis.

First, two important elementary school concepts:

Cause & Effect
Action & Reaction

No-one needs to look those up, right? Still - people will study price action (AKA Effect AKA Reaction) for years looking for the answers.

TA is the science of looking at effect hoping to find cause.

This is not to say market activity cannot tip your hand to what caused a move.

This is not to say the only effects are fundamental and are outside of what can be seen on a chart. Markets get out of balance for instance.

You just wont find cause in most TA textbooks. It has to be said that forums are improving nowadays, everyone tried pin bars already and are becoming more savvy.

Perhaps there is hope yet.

Since you mention cause and effect, it might be of interest to read

Cause and Effect (and) Levels and Rates

He's a little bit eccentric but I think he has a valid point here.
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Old Jul 20, 2012, 8:48pm   #23
 
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Joined Feb 2012
Re: TA debunked?

Quote:
Originally Posted by DionysusToast View Post
It's pretty simple to understand what is wrong with textbook technical analysis.

First, two important elementary school concepts:

Cause & Effect
Action & Reaction

No-one needs to look those up, right? Still - people will study price action (AKA Effect AKA Reaction) for years looking for the answers.

TA is the science of looking at effect hoping to find cause.

This is not to say market activity cannot tip your hand to what caused a move.

This is not to say the only effects are fundamental and are outside of what can be seen on a chart. Markets get out of balance for instance.

You just wont find cause in most TA textbooks. It has to be said that forums are improving nowadays, everyone tried pin bars already and are becoming more savvy.

Perhaps there is hope yet.
Absolute to5h with hidden agenda as per normal.
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Old Jul 20, 2012, 10:58pm   #24
Joined Oct 2011
Re: TA debunked?

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Originally Posted by Atilla View Post
Assume there is no TA, no charts, how does one determine;

1. which direction to enter a trade
2. where is the exit point
3. where is the stop

Say yesterday's closing price was £100
So we have no way of looking at previous data on charts.

If you were able to get a feel for the speed of the momentum maybe you could say to yourself , if the next 5 mins the price goes to the next level I put in 10 % of my capital.

I would assume then you would have a gut feel for how quick the price could move next and if it started to go against you with speed you'd auto get out. If however speed of the trades went in your direction, maybe you could say after a gain of 15% I''ll take some profit ,let the trade playout for a few more minutes. If price returned to your origial entry , auto get out. You'd have to have mental stops based on what you were willing to lose and mental limits on what you expected to gain from each trade.

Though for me , a chart and maybe (but not necessarily) a couple of handy indicators is better than trying to remember historical prices and also quicker than drawing it on graph paper.
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Old Jul 21, 2012, 1:19am   #25
 
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Re: TA debunked?

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Originally Posted by ChocolateDigestive View Post
Absolute to5h with hidden agenda as per normal.
Which, as usual, you are unable to break down point by point.

This is a discussion forum and not a playground CD.

It is very simple. We can discuss, disagree, debate points that others make and have a healthy discussion. Or we can do what you do.

Why you resort to such tactics is beyond me. You seem to have your nose permanently out of joint.
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Old Jul 21, 2012, 1:45am   #26
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Re: TA debunked?

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Originally Posted by the hare View Post
Can someone please tell me where everyone gets this ridiculous idea that TA is predictive ? Is it written in a book somewhere ?, is there a website where this nonsense is being promoted ?

Where did this ridiculous urban myth start, and why does an alleged trading forum allow it to continue ?

I could point you to thousands of books, articles, and websites where there is clear and definite proof provided that TA is non predictive. There's a mountain of evidence to support that view.

Despite all of the evidence to the contrary, trading forums are filled with people discussing the predictive capabilities of TA. What is it about forums that lead to such irrational behavior ?

when we talk about TA, it doesn't just mean using indicators etc. Once we open the chart and read off the prices, without plugging in indicators, it is also considered TA! And we should get the term "prediction" right. A prediction is just a prediction. The only outcome is just whether its accurate, or not. That's all. Whether we consider TA predictive or not, it depends. If we can understand and use our tools properly, we can "predict" the next move and act accordingly. That "predictive" property of TA derives from our minds!

Take another example, no indicators, no nothing. Only price chart (candles, bars etc). Even reading off the current price is "predicting" isn't it.? If you interpret a bunch of rising candles around a support as being bullish, then you are "predicting" the next one to be rising as well. Past price data is also "predictive" , why not? You read off support and resistance levels in the past as well , isn't it so? And then you "predict" that price is coming back to test those areas. Who says TA is not "predictive" ? The term "self fullfiling prophecy" comes to mind
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Old Jul 21, 2012, 2:37am   #27
 
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Re: TA debunked?

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Originally Posted by the hare View Post
Can someone please tell me where everyone gets this ridiculous idea that TA is predictive ? Is it written in a book somewhere ?
Yes unfortunately, many of them.
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Old Jul 21, 2012, 5:54am   #28
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Re: TA debunked?

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Originally Posted by DionysusToast View Post
Yes unfortunately, many of them.
many things, ideas in trading are subjective. Only Mr Market is right.
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