jimi
I've been sort of half following your thread but i'm not at all clear what point you're trying to make.
If your purpose is to show that TA is useless then the fact that price appears to have reacted occasionally to your irrationally (eyes shut) drawn lines demonstrates nothing. It is akin to the fallacious argument "This idiot has blue eyes, therefore all blue eyed people are idiots".
If your purpose is to show that your bottom line depends on where you get out rather than where you get in, then I'm with you rather more albeit that a well-timed entry helps enormously.
- - - - - - - - - - - - -
Brajon
The syllogism of ancient Greece might be devastating when applied to a black swan or blue eyed idiot. However, when it comes to understanding financial markets I am more persuaded by Mandelbrot, the father of fractal theory who is without any possible doubt one of the greatest thinkers of the 20th century and who has studied finance since the 1960s. Somewhat more than most I suspect.
His book ‘The (Mis)behaviour of Markets’ is not the source of my thinking, but clearly represents the thoughts I’ve been having for a long time. (If anyone thinks I am comparing myself to Mandelbrot, they seriously need help. Handbags down).
As Mandelbrot says, his book will not make you rich, but there are so many wonderful quotes, please permit me to mention a few relevant to this thread:
“All major ‘forex’ houses employ technical analysts to find ‘support points’, ‘trading ranges’, and other patterns in the tick-by-tick data of the world’s biggest and fastest market. And in the fun-house mirror logic of markets, the chartists can at times be correct. Sterling/dollar quotes really can approach a level advertised by the technical analysts, and then pull back as if hitting a solid wall – or accelerate as if bursting through a barrier. But this is a confidence trick: Everybody knows that everybody knows about the support points, so they place their bets accordingly. It beggars belief that vast sums can change hands on the basis of such financial astrology. It may work at times, but it is not a foundation on which to build a global risk-management system”. Nor a personal trading plan I suspect.
“Prices are not predictable, but their fluctuations can be described by the mathematical laws of chance”.
“Apparently, a reluctance to recant, and thereby to demystify the priesthood, is not limited to theologians”.
“My mathematical models can generate charts that – purely by the operation of random processes – appear to trend and cycle”.
“Dice fall by chance. Roulette wheels spin by chance. But” ... “the Euro-dollar exchange rate” ... does “not rise by the mathematical rules of chance”. (Just in case anyone misunderstands the previous quotes).
“Anticipation is a feature unique to economics. It is psychology, individual and mass – even harder to fathom than the paradoxes of quantum mechanics”.
And this is from a man who actually knows, who won the Wolf Prize in Physics (often considered the most prestigious award in physics after the Nobel Prize), which praised him for having “changed our view of nature”.
“After the fact, with enough time and effort, we can piece together a tolerable cause-and-effect story of why a price moved in the way it did. But who cares? It is too late by then. Fortunes have been made and lost. Before the fact, in the real world of fast markets, veiled motives, and uncertain outcomes, probability is the only tool at our disposal”.
“’Chartists’ spend their days studying financial graphs, spotting head-and-shoulder patterns, identifying compression periods or support levels, and then confidently advising their clients to buy or sell. Would they spot the difference if I slipped one of these coin-tossing charts into their folders? Should I expect a call from one, advising me to buy?”
I’d like to finish with a sillygism of my own: Mandelbrot is a mathematician, the markets are not mathematical, so all that stuff is rubbish. Yes it can all be put down in a ‘one-liner’, but please don’t. If anyone is motivated to disagree in writing, then say why and not in a few words.
