Hey, Techies......Reality Check

[ducati998]

rogue

Couldn't agree more, and as you point out I invited the views of a fundamental analyst just today on another thread, however how that viewpoint is expressed determines to a great degree how it is received. It is doubtless fortunate you do not have to make a living as a negotiator.

I know, I'd be living on fresh air and rainwater.

As you have traded technically yourself I wonder why you didn't use your own numbers to "tell the story"

Mine were too good, and would have ruined the point I wished to make!

I am a christian but have read into Buddhism, Judaism and Islam. There is no need to lack faith or belief in one concept to observe or study another. I leave that way of thinking to the narrow minded. Indeed it is the attitude of "My way, or a variant of my way, to the exclusion of all others" that creates the darker side of the world we live in

Agreed (lots of religion on the boards atm) and, as people seem to ignore, I have traded technically, and quite honestly could bury most of them.

cheers d998

 

[roguetrader]

Mine were too good, and would have ruined the point I wished to make!

Quite, hardly a balanced point then.

and, as people seem to ignore, I have traded technically, and quite honestly could bury most of them.

Actually a point I rely on, and the achilles heel of your approach to TA on these boards. Is the use of TA a holy grail? Certainly not! There are plenty of statistics to prove otherwise. Is it easy to make money employing a largely TA based method? I would say no, and I depend on that, given that trading is a zero sum game if it were easy, then it wouldn't be easy. Hmn, there's a thing.
But.....can an individual trade very profitably using a largely based TA approach, especially knowing and accepting its weaknesses and flaws and compensating wherever possible for those? I say definitely. But it takes time, effort, discipline and dedication. Most would be traders are not beaten by the markets, or the method they are trying to use. They beaten by themselves, plain and simple.

 

[SOCRATES]

The Greasy Pole of Technical Endeavour.

having worked with TA for a number of years, i have found that it has limited use and only as a form of an art rather than a science. the main patterns are not even quantified outside of the work of dr. andrew lo http://www.fenews.com/fen26/lo.html of MIT therefore its difficult to test their validity without being able to define them. TA will show you were a stock has been in the past and is useful sometimes for analysis and bias creation but not to trade from only. yeah, everyone can point to someone that is succesful using TA strictly, but one can also point to succesful palm readers etc. furthermore, its not FA or TA that works in daytrading but rather an understanding of supply and demand that enables long term success. Ta represents the past, don't forget it ! here's an interview i found with someone who has done extensive testing of TA , its good reading. enjoY !

http://www.realworldtrading.com/index.cfm?section=interviews&id=40


surfer

I find your post both entertaining and interesting.

This is because a great many people are very baffled by TA.

You are quite correct in saying that it is an art, but I would add to your comment that it is "an art form", rather than an art.

It happens that in order to be proficient at this elusive skill the individual has evolve to be artful rather than arty.

This is because this status cannot be achieved without having a very sound base of knowledge of the topic and all the ramifications of its apparent perversity.

As a vital ingredient of this knowledge involves experience in dealing with it, many lose patience during the effort required to master it.

As this effort has to be sustained with determination and patience over a very long time, I am not surprised so many people give up.

The main problem is that progress can be very slow, and one wrong turning is enough to set back the progress so far made nearly back to the start.

I agree that for those not devoted to challenges of this sort, repeated attempts at this greasy pole kind of endeavour would eventually prove tiresome and futile.

I truly commiserate with you but I am gratified to be able to inform you that fortunately I am not beset by these problems.

It is horses for courses and each one to his own, and wish you very good luck.

 

[SOCRATES]

The Story of Cedric The Tramp.

rogue



Agreed (lots of religion on the boards atm) and, as people seem to ignore, I have traded technically, and quite honestly could bury most of them.

cheers d998

Now you ought not to boast as that is in very bad taste and upsets people ducatti, you ought not to be so abrasive really.

Some of the most unlikely people are full of surprises ducatti, and some of them very humble.

Many years ago I lived in South Kensington, in London, just off the Cromwell Road.

I used to see an old boy, dressed in ragged clothes, worn out shoes, and a tattered trilby hat, but clean, often rootling about in the litter bins in and around Cromwell Road and Gloucester Road.

He had a bearing about him that defined him as a gentleman who had fallen on severely bad times. He had an air of genteel decay and melancholic aspect about him and this intruigued me.

I thought he was scavenging for food.

One day I walked up to him and offered him some money for him to buy himself a sandwich.
He appeared to be sort of offended but declined very politely, and I withdrew.

I made a point of studying his antics whenever I saw him, going about from litter bin to litter bin, systematically searching inside them. He always carried a bulging carrier bag.

I very soon observed that the object of his searches was not for food as I first thought.

The object of his interest was discarded daily papers.

In those days there was a branch of Midland Bank across the road from Gloucester Rd Tube Station where I had an account and I stood in the doorway of the bank observing his antics.

I happened to remark to a member of staff who came out to take the Yellow Griffon ( anyone remember the yellow Griffon ?) inside at the end of the day about this curious behaviour and he gave me a wan smile and a nod.

Four years later I was to find out the significance of that nod.

As it turned out the old boy had just died. There was an article in the local paper about it that was confirmed to me by the flower seller in the street who knew the whole story.

This old boy had been a major in the Indian Army. He was something of a recluse, and lived in a basement flat round the corner that he shared with 3 cats.

He led a truly spartan existence. Apparently all his furniture with the exception of his bed was made out ot tea chests and cardboard boxes.

He had no relatives at all.

He died intestate (that is, he did not leave a will) and as a consequence the state took the lot, which amounted to more than two and a half million pounds.

I was also told that he had eight bank accounts.

He had accumulated this wealth since the second world war by dealing in ordinary shares, and was able to recite to his bank manager without the slightest hesitation all the current prices, dividend yields, cover, earnings for all the constituents of the (then, at that time) FT Index.

I was also told that three rooms in his basement were crammed to the ceiling were newpapers, arranged neatly like a sort of maze.

He had made his fortune over many years of investing, buying and selling Stocks and Shares.

The purpose of his daily peregrinations and forays into dustbins and litter bins was to keep up to date with the business news and latest Stock Prices, as he was determined not to waste money on newspapers.

Neaither did he posess a radio, record player, cassette, or television.

Now, ducatti, there is a dedicated Fundie for you, and one that never boasted.

 

[ducati998]

rogue

Actually a point I rely on, and the achilles heel of your approach to TA on these boards. Is the use of TA a holy grail? Certainly not! There are plenty of statistics to prove otherwise. Is it easy to make money employing a largely TA based method? I would say no, and I depend on that, given that trading is a zero sum game if it were easy, then it wouldn't be easy. Hmn, there's a thing.

And finally we're getting somewhere.
Why is it not easy to make money employing a largely Technical methodology?
And that is the correct avenue to explore further.

In order of importance;
Knowledge
Courage

All after is of only minor importance.

An example.
FetteredChinos system, running as Live & Die.
Methodology (Knowledge) & Balls of steel. (Courage)

It will be interesting to see how it pans out in % terms, but I suspect it will outperform a "technical" system.

Soccy................baby

You got blindsided by the tongue embedded firmly in cheek.

cheers d998

 

[SOCRATES]

rogue


Soccy................baby

You got blindsided by the tongue embedded firmly in cheek.

cheers d998

But you like it really ducatti, as I deliver very good analogies to you, with the very best intentions, and I only hope they really land.

 

[marketsurfer]

I find your post both entertaining and interesting.

This is because a great many people are very baffled by TA.

You are quite correct in saying that it is an art, but I would add to your comment that it is "an art form", rather than an art.

It happens that in order to be proficient at this elusive skill the individual has evolve to be artful rather than arty.

This is because this status cannot be achieved without having a very sound base of knowledge of the topic and all the ramifications of its apparent perversity.

As a vital ingredient of this knowledge involves experience in dealing with it, many lose patience during the effort required to master it.

As this effort has to be sustained with determination and patience over a very long time, I am not surprised so many people give up.

The main problem is that progress can be very slow, and one wrong turning is enough to set back the progress so far made nearly back to the start.

I agree that for those not devoted to challenges of this sort, repeated attempts at this greasy pole kind of endeavour would eventually prove tiresome and futile.

I truly commiserate with you but I am gratified to be able to inform you that fortunately I am not beset by these problems.

It is horses for courses and each one to his own, and wish you very good luck.

hey socrates,

you are a good writer, i enjoy reading material! Have you read "Winner Take All" by Gallacher regarding TA? I am not baffled nor confused by TA but merely question the validity of something that can not be tested objectively and relies on the past to make decisions into the future. in addition, price patterns only exist in hindsight by definition--there are inherent logical issues with absolute reliance on TA that i will be happy to elaborate on if anyone cares.

stay well,

surfer

 

[LION63]

Socrates,

Your story about Cedric the tramp was very good and I assume that 5% of the members here will have enjoyed or learnt from it. Unfortunately, the remaining 95% will wonder why you are posting such nonsense on a trading forum board, that tells its own story.

It is funny how people are quick to make posts that attempt to ridicule statements that are made but as soon as the intellectual debates start they run for cover. It has already been mentioned in this thread that many of us suffer from being obtuse and sadly that sounds the death knell for any would be trader.

RogueTrader,

"Interestingly when he commits to his trade there will doubtless be technical traders already on board that ride."

In this instance you may be marginally wrong as I opened a short position in the FTSE 100 at 8.49pm yesterday. Needless, to say, there may be some TA exponents that are manning the train but they are amongst the cream of the crop. User has just posted his opinion of the indices on another thread and his record speaks for itself.

 

[nine]

Yes, great story Socrates.

Hey Surfer, You can use your own Nick. :cheesy:

I note your statement: "merely question the validity of something that can not be tested objectively and relies on the past to make decisions into the future." Much of business is done on exactly this basis --- why should it be any less successful in trading?

 

[ducati998]

surfer

there are inherent logical issues with absolute reliance on TA that i will be happy to elaborate on if anyone cares.

Elaborate away.................I'm interested.
cheers d998

 

[ducati998]

rogue

given that trading is a zero sum game if it were easy, then it wouldn't be easy.

And herein is the first lie.
Trading becomes profitable, when you break the fallacy of the zero sum game.

cheers d998

 

[danfreek]

As I see it, success at FA relies entirely on knowing more than the absolute majority of market participants, while I believe that I am smarter than the average person, I am not deluded enough to think that I am more knowlegeable about any particular share, future, index etc than all of the people in the city that live and breath it every day.

One of the arguements against TA on this thread seems to be that it uses past information to make a prediction about the future, well, I'm confused, exactly what part of FA uses information from the future, is it the part where Marty McFly lands in your living room in his DeLorean to hand you next years profit figures?

I am not saying that FA doesn't work, I would be an idiot to do so, one of my friends makes consistently good calls on UK stocks and he doesn't know the first thing about TA, but it's not the only way, and it's not the best way either, there isn't a best way, only a best way for you.

 

[LION63]

On the contrary, with FA you can know much less than the majority and still make a tidy profit it all comes down to research. If you keep sifting through data and information the gems turn up, it does not make the individual smart it simply means that he/she has found something that has been overlooked by others.

The mistake that many traders make is believing that because they participate in a market that is dominated by the big players, they are always going to be at a disadvantage. This is far from the truth and is actually an advantage - the individual does not have all the cumbersome rules and regulations to follow when stock picking. Joe Average trading based on fundamentals will always make money in the markets the question is - How much?

 

[roguetrader]

rogue



And herein is the first lie.
Trading becomes profitable, when you break the fallacy of the zero sum game.

cheers d998

That, you would have to elaborate on, though I suspect you have used my generalisation as an excuse to make a generalisation of your own, and hence we are talking at cross purposes. The statement in its implication is inaccurate to start us off, since it implies that you must conform to your view in order to profit.
But this is an interesting topic since the "zero-sum game" is widely quoted I think we should explore.

 

[roguetrader]

The mistake that many traders make is believing that because they participate in a market that is dominated by the big players, they are always going to be at a disadvantage. This is far from the truth and is actually an advantage - the individual does not have all the cumbersome rules and regulations to follow when stock picking.

Very well put, and then some, this goes in some way to the point I made earlier, that traders are not beaten by the markets or the methods they try to use, but by themselves. One individual will always have at hand an advantage over another, even though that advantage may not be immediately apparent. The trick is to identify it and capitalise on it. One of the keys to survival in any game is to quickly identify your strengths and your opponents weaknesses relatively, and adapt to maximising the advantage whilst minimising the disadvantages.

 

[LION63]

An addition is that the individual should know his/her limitations.

 

[roguetrader]

I opened a short position in the FTSE 100 at 8.49pm yesterday. Needless, to say, there may be some TA exponents that are manning the train but they are amongst the cream of the crop.

Interesting, I don't follow the FTSE myself, but what changed fundamentally in the last day or so to provoke that entry?

 

[LION63]

Not a lot changed actually, it probably came down to a long conversation I had with a friend earlier in the evening. It was all doom and gloom and I decided that I might as well put my money on the line and back by beliefs.

 

[charliechan]

hey socrates,

you are a good writer, i enjoy reading material! Have you read "Winner Take All" by Gallacher regarding TA? I am not baffled nor confused by TA but merely question the validity of something that can not be tested objectively and relies on the past to make decisions into the future. in addition, price patterns only exist in hindsight by definition--there are inherent logical issues with absolute reliance on TA that i will be happy to elaborate on if anyone cares.

stay well,

surfer

hey hank - you still short oil??

 

[charliechan]

On the contrary, with FA you can know much less than the majority and still make a tidy profit it all comes down to research. If you keep sifting through data and information the gems turn up, it does not make the individual smart it simply means that he/she has found something that has been overlooked by others.

The mistake that many traders make is believing that because they participate in a market that is dominated by the big players, they are always going to be at a disadvantage. This is far from the truth and is actually an advantage - the individual does not have all the cumbersome rules and regulations to follow when stock picking. Joe Average trading based on fundamentals will always make money in the markets the question is - How much?

well here lies the issue old fruit!!

so fundamental traders need to do a lot of research. excellent! i would imagine it would take many a year for a novice to come by what is useful, and what is not, in order to become proficient at fa.

it is the same with ta. a lot of work needs be done in order to be able to use it profitably. when one does this, he usually finds that 'traditional' ta aint worth much cop anyway, but there are invaluable clues as to what lies on the horizon once we understand what we are really looking at.

the big problem with ta is that most people want quick results and ta first appears to promise this. it doesnt.

people also treat ta as a science - mostly because (imo) we are taught to do this in schools, and seems to give an air of intellectual credibility that pleases the ego (but not the wallet).

also, BOTH ta and fa are prone to manipulation. companies & governments lie and bend rules when releasing fa info to lull investors into traps (re steven byers). large traders manipulate order flow and prices so as to lull ta traders in to traps. only the proficient recognise these traps.

ta is not a science, and neither can it be learned by looking at a few books. just like fa.

i have stated before though that the argument over which is best (ta or fa) is futile anyway when looking at 'longer' periods, and that a combination of both is the proper way forward. but this obviously spoils the debate and the need for concise black and white answers - the science coming back into it.