TA debunked?

This is a discussion on TA debunked? within the Technical Analysis forums, part of the Methods category; I think trading is mostly subjective and I think a lot of textbook TA promises an objective method of analysis. ...

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Old Jul 21, 2012, 7:13am   #29
 
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Joined Dec 2009
Re: TA debunked?

I think trading is mostly subjective and I think a lot of textbook TA promises an objective method of analysis.

Admittedly, it's been a number of years since I read a TA book. Mind you - I've just read Markets In Profile by James Dalton and I thought it was fantastic.

I think the biggest failing in all the most popular TA books - Alexander Elder and the like - is that they talk as if the charts are the market. They discuss indicators/candlesticks etc as if they are the market and as if understanding them is what makes you a good trader. It is as if you can learn the indicators and patterns and not really have any clue other than that in order to make money.

I think you can only make money from charts if you understand the market they represent. That gives you the context within which you can read something into the activity you see on the chart.

If you take concepts like "oversold" on an indicator - it's complete tosh. Oversold conditions do occur, they are fairly easy to spot, not so easy to trade though as you need large spheres. They have little relationship to the "oversold" in those 40 year old techniques you read in traditional TA journals though.
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I cannot see., however why we should expect to find a "system" which will work in the stock market; surely the possibilities of profits for the student justify the time and effort required to learn market interpretation.

Humphrey B Neill - 1931
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Old Jul 21, 2012, 7:38am   #30
Joined Nov 2001
Re: TA debunked?

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Originally Posted by DionysusToast View Post
Yes unfortunately, many of them.
There is no way that a market can be predictive. Chart patterrns do reoccur, giving the trader an impression that they are predictive but it is my experience that they are only so in hindsight and what did happen should have been predicted-

I have ceased to be surprised by what happens. I do what I think is a probability and believe that the longer one is in a trade, the more likely it is to go wrong, in the end.
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Old Jul 21, 2012, 8:17am   #31
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Re: TA debunked?

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Originally Posted by DionysusToast View Post
I think the biggest failing in all the most popular TA books - Alexander Elder and the like - is that they talk as if the charts are the market. They discuss indicators/candlesticks etc as if they are the market and as if understanding them is what makes you a good trader.
yes the chart IS the market. If not, can you tell me what is?
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Old Jul 21, 2012, 8:21am   #32
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Re: TA debunked?

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yes the chart IS the market. If not, can you tell me what is?
The chart was the market. Are you telling me that you are predictive?
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Old Jul 21, 2012, 8:23am   #33
Joined Oct 2011
Re: TA debunked?

Just because we all experience different things doesn't mean the other persons view of the world is eiteher wrong or flawed.

TECHNICAL =
1.
belonging or pertaining to an art, science, or the like: technical skill.
2.
peculiar to or characteristic of a particular art, science, profession, trade, etc.: technical details.
3.
using terminology or treating subject matter in a manner peculiar to a particular field, as a writer or a book: a technical report.
4.
skilled in or familiar in a practical way with a particular art, trade, etc., as a person.
5.
of, pertaining to, or showing technique.

ANALYSIS =
1.

the separating of any material or abstract entity into its constituent elements ( opposed to synthesis).
2.
this process as a method of studying the nature of something or of determining its essential features and their relations: the grammatical analysis of a sentence.
3.
a presentation, usually in writing, of the results of this process: The paper published an analysis of the political situation.
4.
a philosophical method of exhibiting complex concepts or propositions as compounds or functions of more basic ones.
5.
Mathematics .
a.
an investigation based on the properties of numbers.
b.
the discussion of a problem by algebra, as opposed to geometry.
c.
the branch of mathematics consisting of calculus and its higher developments.
d.
a system of calculation, as combinatorial analysis or vector analysis.
e.
a method of proving a proposition by assuming the result and working backward to something that is known to be true. Compare synthesis ( def. 4 ) .


I reckon we all do the above... How else do we decide where the majority of other traders think price is fair or unfair. ?

Whether you use a Japanese Candlestick, Point&Figure, Line, Average, 100 previous price points, we all have to study the price as of where it was and where it is in relation to it, on any time frame.

From our analysis or home work we shouldn't have to trade randomly, we can wait for price to come to a level and trade what we think is the next higher probability trade there. Otherwise you may as well flip a coin.

If a purely fundamental trader said they didn't use any technical analysis, they would only be allowed to know the current price of a company, the name of the company, the name of the directors and the country in which the company was based and worked in.

As soon as you start working out where the price of the companies share is in relation to the amount of cash they have, in relation to how many shares are in the market, where the overal market is in relation to itself and the company, you are basically talking numbers, historical and present. All of which can be neatly presented in a chart, spread sheet, or brokers note. Which from the above definitions in my opinion, is from as soon as you do any analysis, Technical Analysis.
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Old Jul 21, 2012, 8:38am   #34
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Re: TA debunked?

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Originally Posted by DionysusToast View Post
Yes unfortunately, many of them.
you must be reading different books to me
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Old Jul 21, 2012, 8:54am   #35
Joined Nov 2001
Re: TA debunked?

I have told of my experience with Next PLC on previous occasions. This company was going through a bad period, with George Davis, his resignation etc. It was making tens of millions of pounds profit, had no debt and had a policy of organic growth ie. would not take over existing firms to increase expansion.

I read about this, at first, in Jim Slater's "The Zulu Principle". He said that, then, it was down to a few pence. When I read the book it was something over 1 pound, still. I did the numbers and bought the shares. Charts, in no way, gave a true indication of the value of this company. In fact, it looked like a basket case.

Lots of other companies today, are not priced at their true worth. Or are they? Charts represent the fear and hopes that investors have in that share. Most of the FT100 shares are not growth shares but they are safe havens. So they say. Charts, in the main, show what the investor thinks of their future prospects but, quite often, scandal will blind an investor's judgement adversely. Or the opposite can happen.

Slater's book cost me 19 pounds, by the way!
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