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 wallstreetwarrior87 Very wise, as my next point was going to be - what if we take price ...

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Old Sep 6, 2017, 2:21pm   #17
 
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Originally Posted by wallstreetwarrior87 View Post
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?
If you were to remove price from the chart, you'd be getting back to traditional technical analysis, i.e., the analysis of price movement, specifically the trader behavior that moves price. Several decades ago, a "trading for dummies" attitude took over, and indicators became the sine qua non for beginning traders in particular (and those who sold products and courses to beginners). After all, any idiot can buy or sell when the red line crosses the green line. And now that people are at last beginning to realize that it's all nonsense, technical analysis gets a bad rap. But if they were to examine the origins of technical analysis, as distinct from fundamental analysis, they'd find a wealth of useful information.
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Old Sep 6, 2017, 2:49pm   #18
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Originally Posted by dbphoenix View Post
If you were to remove price from the chart, you'd be getting back to traditional technical analysis, i.e., the analysis of price movement, specifically the trader behavior that moves price. Several decades ago, a "trading for dummies" attitude took over, and indicators became the sine qua non for beginning traders in particular (and those who sold products and courses to beginners). After all, any idiot can buy or sell when the red line crosses the green line. And now that people are at last beginning to realize that it's all nonsense, technical analysis gets a bad rap. But if they were to examine the origins of technical analysis, as distinct from fundamental analysis, they'd find a wealth of useful information.
Exactly!

All of this seems to get missed. But, if we delve further, we get so much useful information as you say. Then we really can analyse the market from a "TA" POV, and it really starts getting interesting:
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Old Sep 6, 2017, 4:00pm   #19
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Originally Posted by barjon View Post
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.
Yes, I have rephrased that part, hopefully that will make the point better. Sorry but that was written at 2 in the morning.
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Old Sep 6, 2017, 4:05pm   #20
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Originally Posted by tomorton View Post
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?
I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are..., only stating that the most of it is SUBJECTIVELY calculated.

Indeed if you read correctly, I did add that one could use both tA and maths together.

And I have stated what my approach , please re-read.
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Old Sep 6, 2017, 4:10pm   #21
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Originally Posted by wallstreetwarrior87 View Post
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
Yes, I have rephrased that part, hopefully that will make the point better. Sorry but that was written at 2 in the morning.

Anyhow, despite that , numbers are numbers and the analysis should be based n that ( ie. maths) to keep it the calculations OBJECTIVE. That is my point.
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Old Sep 6, 2017, 4:11pm   #22
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Originally Posted by wisefoolx View Post
I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are..., only stating that the most of it is SUBJECTIVELY calculated.

Indeed if you read correctly, I did add that one could use both tA and maths together.

And I have stated what my approach , please re-read.

Sorry to bother you, I'm sure you're busy. So am I.
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Old Sep 6, 2017, 4:14pm   #23
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wisefoolx started this thread What do people mean by removing price from the chart - you mean taking it off the y axis ?
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Old Sep 6, 2017, 4:27pm   #24
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Originally Posted by wisefoolx View Post
I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are...
But you are unable or unwilling to use it to demonstrate a trade. Therefore it must be bunk. Otherwise, what are you afraid of ?
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