Does technical analysis work or not?

[dbphoenix]

Db and Fugs, I see similarities in the zones that define trades in our charts.

If the focus is on where buyers step up to the plate and where they say f**k it, then the zones should be similar.

Db

 

[babyjake1961]

Take any indicator-based EA and optimize it for the past data for over 10 years to have a steady upward profit curve. Why will it inevitably fail soon after you start trading it live if TA as means of market prediction works?

 

[dbphoenix]

Take any indicator-based EA and optimize it for the past data for over 10 years to have a steady upward profit curve. Why will it inevitably fail soon after you start trading it live if TA as means of market prediction works?

If you were to trade it as if you were a computer program, then it likely would not fail. But you're not. Traders have had to relearn this again and again for decades.

Traders would save themselves a great deal of time and money if they were to decide whether they want to trade or write programs before they ever begin. A surprising number have no interest in trading at all.

Db

 

[babyjake1961]

If you were to trade it as if you were a computer program, then it likely would not fail.

You just set it up on your VPS and it runs from there. How would a computer program trade it?

 

[timsk]

As long as charts are being posted . . .

Hi dbp,
I thought I had my head around the SLA and, as such, I would have expected you to exit the short 3 bars earlier when price closed above the supply line. What am I missing / overlooking?
Tim.

 

[Fugazsy]

here price broke above the 2 previous day high and a down trendline (needed to be drawn from the 4h tf), then reversed and closed below the all......made 50 pips....she moved quickly....I always take my money when she is that generous.... I might be wrong and she could continue much more...but I am not here to be right.... I leave that to Tar..... :whistling

 

[zaysev36]

I guess it can't work on its own, because TA only shows what has happened previously, what was the reason, and it's up to a trader, subjective human being, to figure out what will happen after this, and what the consequences will be.

 

[EnlightenedJoe]

Take any indicator-based EA and optimize it for the past data for over 10 years to have a steady upward profit curve. Why will it inevitably fail soon after you start trading it live if TA as means of market prediction works?

It doesn't work. The people taking the other side of your mechanical bet is not mechanical in nature. They'd clean out a bot in no time.

 

[dbphoenix]

You just set it up on your VPS and it runs from there. How would a computer program trade it?

It wouldn't hesitate.

It wouldn't have doubts.

It wouldn't chase.

It wouldn't revenge trade.

It wouldn't let losses run.

It wouldn't cut profits short.

It wouldn't be afraid.

It wouldn't be arrogant.

It wouldn't get tired.

It wouldn't get hungry or have to go the bathroom.

It wouldn't be distracted by trading forums.

Db

 

[EnlightenedJoe]

It wouldn't hesitate.

It wouldn't have doubts.

It wouldn't chase.

It wouldn't revenge trade.

It wouldn't less losses run.

It wouldn't cut profits short.

It wouldn't be afraid.

It wouldn't be arrogant.

It wouldn't get tired.

It wouldn't get hungry or have to go the bathroom.

It wouldn't be distracted by trading forums.

Db

It wouldn't understand supply and demand either. Since you believe the market is about supply and demand, if your bot doesn't understand it, how can it possibly be successful ?

To counter your assertion that your bot can understand supply and demand, show us what your bot is saying. Where is supply and where is demand currently ?

 

[dbphoenix]

Hi dbp,
I thought I had my head around the SLA and, as such, I would have expected you to exit the short 3 bars earlier when price closed above the supply line. What am I missing / overlooking?
Tim.

Depends on whether one is going by the pdf or by the book. The pdf is a primer for beginners and struggling traders. It has very little wiggle room. When price breaks the line, the trader exits, the object being to instill a certain kind of behavior. If the trader then gets into it and sticks with it, after a few weeks he begins to develop a sensitivity to how and why and when traders are moving price and sloughs off indicators and candles and colors and patterns. He also begins to understand that various instruments trade differently, that some are simpler, that some are more directional, that some are more predictable. This often means leaving his "comfort zone" and experimenting with instruments with which he is unfamiliar.

But the pdf is 30 pages. The book is 400. The pdf also focuses on weekly, daily, and hourly charts. It does not address intraday trading at all. Nor does it get into volume. Nor does it get into the different classes of traders. As I wrote it, and as I have been trading it for several years (and Wyckoff for ten years before that), I know when to give price a little room. But this sort of fuzziness is exactly the sort of thing that the beginner and the struggling trader should avoid like the plague.

Db

 

[EnlightenedJoe]

Anyone knows how's the supply of gold USD coming along ? The price is rising. I would be interested in long if they sharply lower it first to 1190.

 

[timsk]

. . .But this sort of fuzziness is exactly the sort of thing that the beginner and the struggling trader should avoid like the plague.

Aha, gotcha, it's the 'fuzziness' that I wasn't factoring into the equation!

 

[Fugazsy]

with technicality you have to be nimble not rigid, you have to learn to bring yourself forward, bring in your own creativity......Technicality is the representation of the mass psychology..... and they also fail and their failure fail making a more reliable pattern in the original direction......why? because here you have more trapped traders fuelling the opposite direction to cover at a loss.

This is the way you need to think, technicality will help you to tell you where traders sit, where they lost and were they have gain, where the others will join in if......Learn to bring your own creativity to interpret....if you do it will also be fun...

Technicality does not work? Nothing works if you have not the desire to learn and get fully involved....and if you do not have that desire then you need to work towards it.

this down trend line shows you a trader could have money twice, first as a fail BO (30m) and then as one pip bounce (5m).....both in the direction of the least resistance....

 

[dbphoenix]

Aha, gotcha, it's the 'fuzziness' that I wasn't factoring into the equation!

Fuzzy only to someone who's unfamiliar with trading price (which of course does not include you). After a while, hopefully a short while, the beginner will note that price often stages a continuation after he's exited the trade according to the rule. Some will say to hell with it and abandon the rule. They will quickly find out, though, that they are falling into the old "let my losses run" trap. Some will investigate the differences between those breaks that turn into reversals and those that revert to the trend and stage continuations, the difference being by how much price has broken the line, i.e., broken stride. This leeway, though it can be as rigid as the trader likes, will vary according to the instrument as well as the interval. A leeway of three points on a tick chart has a very different impact from the same using a 5m interval or a 15m interval, much less an hourly or daily. And whatever leeway the trader allows on the NQ won't be the same as what's best for the CAC or the DAX or gold or oil or whatever. Each instrument and each interval has to be characterized individually.

Jesse Livermore went through all this a hundred years ago. By hand. With pencil and paper. So it isn't as if software or programs are required, much less anything that costs money (except for the pencils). It just takes the desire and the will to do it.

Db

 

[EnlightenedJoe]

Jesse Livermore went through all this a hundred years ago.

Jesse was a loser. In the end the bank took all he's got. His failure was his size. If he kept his size small, the bank would not have been able to take him to the cleaners. I like his strategy, but wrong size.

 

[EnlightenedJoe]

Technicality does not work? ... this down trend line shows you a trader could have money twice..

No it doesn't. Reason is the technicality could not show us a trader who have money twice. What he could have is not very useful. For instance, he could not use what he could have to pay for lunch.

 

[dbphoenix]

.

 

[EnlightenedJoe]

It would be an incorrect assumption just because I mentioned Eddie Murphy doesn't make me a black man. I value all humour regardless of the race of the comedian. In trading lulz is the oil that keeps the engine turning.

 

[Fugazsy]

Jesse was a loser. In the end the bank took all he's got. His failure was his size. If he kept his size small, the bank would not have been able to take him to the cleaners.

He was a great trader, his book is a gem and fully of great sentences:

"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

he loved his job and was able to be one of the best in his time, yes he did not end up well, as a person he was deeply depressed and at the time it was considered a tabu' having mental issues.....his wife of course did not help.....it shows is best to have at least two affairs....plus the wife.... :innocent: