The Problem with Technical Analysis

This is a discussion on The Problem with Technical Analysis within the Technical Analysis forums, part of the Methods category; Originally Posted by barjon That would make sense if future price is indeed determined by price in the past. Your ...

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Old Sep 6, 2017, 10:00am   #9
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That would make sense if future price is indeed determined by price in the past. Your argument is based on that assumption which I think is doubtful. You could say equally that future pattern of prices is determined by past patterns - which most ta is based on. Just substituting numbers for patterns makes no difference.
Your doubt doesn't seem too genuine given your ongoing interest in the tall candles. Isn't that also based on past patterns ?

The failure in the OP's thinking along with the TA, the big candles crowd is they believe they can extract money out of someone's wallet by using a mechanical formula. This cannot be done except for the formula of pointing a gun at the wallet owner's head. Otherwise the wallet owner will do everything in his power to preserve his capital, include violating all the big candle patterns you care to throw at him. Wouldn't you do the same if you were in his shoes ?

The OP went from trading £5-£30 a point in the past to now not daring to call a trade worth no more than a penny just proves my point. There is no value in these numbers and patterns. It's a dead end, a cul-de-sac.

Last edited by EnlightenedJoe; Sep 6, 2017 at 10:15am.
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Old Sep 6, 2017, 10:19am   #10
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Hi wisefoolx - You've followed a line in your opening post concerning TA that many critics of some TA approaches or even TA as a whole often use.

You've suggested that your approach is better, which is fine and might well be correct for all I know. But in order to demonstrate this you've selected aspects of TA that are inherently weak, the implication being that all TA-based traders equally respect these weak approaches.

If you had only set out to criticise trend-lines and RSI I'd be right behind you. Or if you were showing better types of trend-line TA or a better way to use them and RSI.

But as it is I think you just might be dragged into the usual circular arguments. Are you going to say more about your own approach?
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Old Sep 6, 2017, 12:06pm   #11
 
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Your doubt doesn't seem too genuine given your ongoing interest in the tall candles. Isn't that also based on past patterns?
I don't know how many times I have to repeat that I'm not at all interested in tall candles nor have I ever traded them. It was all dredged up by fl from an old discussion thread I started about their merits or otherwise.

So far as TA is concerned I use it as a tool just to point up places where it's reasonable on past experience to take a trade or to end one. Certainly not as any form of predictor.
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Old Sep 6, 2017, 12:32pm   #12
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I don't know how many times I have to repeat that I'm not at all interested in tall candles nor have I ever traded them. It was all dredged up by fl from an old discussion thread I started about their merits or otherwise.

So far as TA is concerned I use it as a tool just to point up places where it's reasonable on past experience to take a trade or to end one. Certainly not as any form of predictor.
My impression wasn't from what fl did. Only a couple of weeks ago, you were talking to someone who offered to test those candles for you. Obviously you are still holding out hope for the big candles. Otherwise I don't see why you would waste someone's time with something you know doesn't work. Maybe you were talking about different candles. Nevertheless it was about patterns that has no basis other than the past.
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Old Sep 6, 2017, 12:44pm   #13
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NO.

I knew this would happen, the article says NOTHING about what works and what doesn't. It does NOT care, that is an individual choice ( what type of TA you use ).

However it demands this : A future price is a number in the future which is determined by numbers in the past. Therefore why should we not use the claculation of numbers to analyse prices ?
Because every market is different. Some markets are used to hedge, and some are more the domain of directionally based decisions.

So TA in "any form" can not be used with any consistency, whether it "works" or not. As the underlying calculations are based on different meanings although its a "physical" number. Its more to do with what the number represents.

Numbers in the future are determined by a lot more than numbers in the past, more to do with time and opportunity, but thats another thread
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Old Sep 6, 2017, 12:52pm   #14
 
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My impression wasn't from what fl did. Only a couple of weeks ago, you were talking to someone who offered to test those candles for you. Obviously you are still holding out hope for the big candles. Otherwise I don't see why you would waste someone's time with something you know doesn't work. Maybe you were talking about different candles. Nevertheless it was about patterns that has no basis other than the past.
We were talking about retracements, not big candles. As usual you seek to twist things to suit your own agenda .
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Old Sep 6, 2017, 1:10pm   #15
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We were talking about retracements, not big candles. As usual you seek to twist things to suit your own agenda .
Very wise, as my next point was going to be - what if we take price off a chart? How will that affect TA? We would then have to move onto the nuts and bolts of the market -

We are left with time and movement (baring a set tick chart of course).

Retracement = movement, not numerical, but physical.

So ultimately, what would the real benefit be to using calculations based on an independent number in the past?
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Old Sep 6, 2017, 1:32pm   #16
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We were talking about retracements, not big candles. As usual you seek to twist things to suit your own agenda .
How was I to know ? I wasn't into TA. One candle two candles, they look all the same to me.

Let's put the big candles aside, this retracement candles work then ?
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