T2W Trading Community

At any given time, there is a specific set of these market participants involved in trading the instrument, and all their individual trading styles combine to make the price behave in certain ways. Different sets of participants will cause different behaviors. For example one FOREX currency pair may have a tendency to always turn on a dime, while another may often consolidate for long periods before changing direction. One may have a very orderly movement and form well defined chart patterns while another is very choppy and undefined, especially around major tops. And as the group of market participants changes over time as some drop out and others begin trading the pair, the price behavior will change with the gradual evolution of the group. This will cause some indicators to work well at some times and poorly in others.

So the way to get superior returns out of the market is not to just find a set of terrific indicators and keep them to yourself. It's not to develop a single well thought out trading strategy. It's to constantly scan the market's price behavior, trying out many combinations of indicators and strategies to see which ones are currently working well. This kind of constant dynamic statistical analysis of historical price movements can only be done with the aid of computers.

While I agree that technical analysis in its classical form is not satisfactory, I believe that its practitioners should be supported and educated by the academic community...not ridiculed by them. It has become clear that the EMH is not widely applicable to markets in the real world. There are trading opportunities which arise in markets and persist for long enough periods of time for traders to profit from them, if they have the correct tools to find and validate these opportunities. The academic world and the trading world can and should work more closely together to explore these possibilities and develop these tools.
This is one of the ideas that I have managed to flesh out the most in my research into FOREX price behavior. I developed a tool called a Price Behavior Map which tracks how various TA indicators have been performing recently across a group of seven currency pairs. By using this tool, I hope to get a better idea of how price behavior evolves over time. And I may just make some nice FOREX trading profits along the way!