If you want to fail as a trader, study TA

[The Expert]

OK, when you are thinking about some things, I will add some more for your brain to work out.

You will hear many traders speak of order routing, islands, rebates, black boxes, etc, etc, etc. I am now telling you, from first hand experience, you do not need to bother yourself with any of that crap.

When you open a position, it will do 1 of 2 things, it will either move in your favor or against you.

How far it moves will depend on many things, much like how fast the horse will run will also depend on many things.

You primary objective is to make money, not save pennies and diddle and daddle around all day. I say forget all the crap and go straight for the jugular, for that is where the blood will flow freely from once you have made your incision.

Pick It, Tick It & Kick It

TA is for the masses, let them continue to diddle and daddle, for that is what they want to do.

Cycles are for young children.

Waves are for the ocean.

Fibs are for liars.

Geometric variations, well, what can I say about this one, only, I hope you have plenty of time on your hands, for you will need every minute of it.

 

[N Rothschild]

well i have tried alot of methods and systems, blown out several accounts and now finally have found a way of trading that suits me and im good at. it does not involve TA and its style eliminates all my bad trading habits caused by emotions. (basically went from day trader to position trader, taking a handfyll of positions per quarter). i'm not really bothered about becoming more profitable as this system is very profitable.

it took me a long time to realize day trading and TA is not for me and imo aload of bull.

 

[The Expert]

well i have tried alot of methods and systems, blown out several accounts and now finally have found a way of trading that suits me and im good at. it does not involve TA and its style eliminates all my bad trading habits caused by emotions. (basically went from day trader to position trader, taking a handfyll of positions per quarter). i'm not really bothered about becoming more profitable as this system is very profitable.

it took me a long time to realize day trading and TA is not for me and imo aload of bull.

Yes, and you are right to do what is right for you, but that in no way implies that it is the best way for making money.

TIM = CAR

Time In Market = Capital At Risk

IAO = MIB

In And Out = Money In Bank

I am sure that many can relate to extremely volatile trading times, when the S&P Options / Futures went lock limit, not a nice time to be in a position if the market is going against you.

It all depends on the end user. Some are happy to diddle and daddle, some do swings and positions and take on the associated risk, and others, well, just like to take money out of the market each and every day, when possible, but be always net positive at the end of each week with no holding positions overnight, for any reason.

 

[N Rothschild]

all my positions have limited risk.

and in the past i have been long in a limit down futures market, no its not pleasant!

 

[DionysusToast]

I like the idea of minimum time in the market and mostly, because of the fund my friend works for, I have decided to stop swing stocks as it seems my presumptions about how much you can make day trading were not correct.

Certainly, if you have spent any time swing trading stocks you would need to be a masochist to use pure TA. For instance, a recent long on HOG (Harley Davidson) got me my ass kicked on a gap down because of a product recall.

I can't see how anyone in a similar position would not go and look up the news on the stock to find out what on happened. Going through this experience a number of times will show you that there are more things to consider that regular TA. With stocks at least, you will get your pants pulled down too many times if you ignore factors that impact the stock price.

When I see people say they are trading stocks, based on pure RTA and that they take no account of these factors that move price, my thoughts are that they are either :
1 - Not trading
2 - Masochistic

Now - I'll be honest, the day trading isn't quite right yet. I have the Time in Market down but I am not capturing large enough moves. Partly this is because I am still honing my technique and partly because I am not yet trading something that has become obvious to me.

Flame away...

 

[N Rothschild]

day trading is for amateurs if you ask me. how many billionaire;s are day traders..? how many hedge funds day trade for a profit? banks? they will but it will represent a tiny proportion of their trading activity..this should tell you alot!

anyone can take a buy or sell signal from some simple TA and grab 20 points and be done, this is not how you get truly wealthy im afraid.

if you go back to the old saying "90% of traders fail" or what ever it is, well 90% of traders are wana be day traders..i think day trading is a misconception that was invented to make more commissions off people lol

 

[DionysusToast]

day trading is for amateurs if you ask me. how many billionaire;s are day traders..? how many hedge funds day trade for a profit? banks? they will but it will represent a tiny proportion of their trading activity..this should tell you alot!

I personally know some guys that have day traded a $21 million account to $26 million in the past 9 months. No overnight positions at all. The main trader has $8 million in his personal account - from day trading too.

I had the same perceptions as you until I met them.

 

[N Rothschild]

so up 25% in 9months? not really that impressive im afraid! might aswell have not bothered at put the money in a hedge fund for that return. Again you are using one or two people to justify something when they are probably the exceptions

 

[DionysusToast]

1 - A sensible answer DT, but if the odds are good then you are not going to make much money with a moderate bet, compared to what you would have made had you bet the correct amount, are you?

Well - I can't imagine gambling on the horses but I do believe in starting small in order to establish a track record. Once you have an idea of your performance, I think it is easier to establish the correct amount to put at stake for each 'bet'.

Of course, if you bet on the only weighted horse in a handicap race on the flats, you could probably increase your position size.

 

[Splitlink]

I've lost the thread. What is RTA, again, please?

 

[DionysusToast]

I've lost the thread. What is RTA, again, please?

Regular/Regurgitated Technical Analysis

You know MACD divergence, MA xovers, Stochastics - all of those common entry techniques often discussed in books on trading despite the fact they don't work.

I think this covers anything you read or learn in 99% of books & courses.

 

[Splitlink]

Regular/Regurgitated Technical Analysis

You know MACD divergence, MA xovers, Stochastics - all of those common entry techniques often discussed in books on trading despite the fact they don't work.

I think this covers anything you read or learn in 99% of books & courses.

Right, thanks. Just wanted to make sure that I wasn't missing a TE masterpiece.

 

[Charlton]

Now, if you were inclined to put a wager on the horses, say 3 to 4 times per week, what is the most important thing that you SHOULD do to maximize you chance of success?

Let's say that you are good at picking winners, and you make good money each and every week, what now is the most important thing you SHOULD do?

One of Grey1’s mantras was about controlling risk. This concept was employed in his methodology in several ways:
(a) Trading individual stocks in the same direction as the market
(b) Ascertaining the relative strengths of stocks and selecting those that aligned with the market i.e. selecting strong stocks if the market was strong and weak stocks if the market was weak. Achieved by looking at recent stock movements relative to the movement of the index as a percentage of ATR
(C) Position sizing

Regarding position sizing, this was not based upon a fixed position quantity nor was it based upon an overall position value being a percentage of available capital. It was based upon ATR instead.

The idea is that a more volatile and unpredictable stock would likely have a greater ATR, so the position size was reduced. A less volatile stock would have a smaller ATR, so position size was increased. In this way the available capital was divided up to enable risk to be balanced across the portfolio, which included about 5-6 stocks because that spread risk and was also a manageable number to monitor.

In addition if market conditions were deemed more risky you either stopped trading or reduced position size accordingly.

Now bringing in a point that you make later in this thread, another way to reduce risk is not to be in the market or, put another way, to get out of the market as soon as possible.

There is a financial concept called opportunity cost. This examines the lost opportunities that your cash could be utilising if it were not tied up elsewhere. So cash tied up in a longer term position might well be continuing to increase profit, but the question is: could it be better utilised in another stock generating more profit ?

Charlton

 

[D70]

You are way too eager and must learn patience, else you will never make it to the big league.

Why do you think every important person in a big company has his/her own office?

This statement is complete rubbish.




.

 

[elitejets]

It's very easy to dismiss all TA as crap, and some of it is.
There are people all over this forum who will spout stuff like "yeah my system gave me a sell signal at 7:20" etc and are armed to the teeth with indicators.
BUT
There are an awful lot of people looking purely at price action on a chart. Trader_Dante, that new prop trader journal, Beachtrader, Rathcoole_Exile (to name just a small few) who are trading pure price action and who look at charts simply as a way to see what the market is doing and let it show its hand.
It's very easy to throw anyone who looks at a chart all in together but if you do that then you are going to get the negative response that The Expert is experiencing.

I don't trade stocks so half of this is going right over my head. I do trade commodity futures and they have some pretty good gaps there. I'm not sure anything I am reading here is of any use at all.

The only thing I am sure of is that anyone who shows up saying my method is better than anyone else's or who dismisses any other method of trading is usually trying to sell you something or has an ego problem. I'm not interested in either.

 

[DionysusToast]

The real issue of course is that many people on this forum aren't actually trading, therefore a lot of the opinions on TA are theoretical and not from putting them into practice, getting stopped out, looking at why it happened and realising there's more to life than squiggly lines.

 

[Splitlink]

Of course, you are right. Everyone does what he can. The for and against arguments have been expressed here and we are back to square one. That will, always, be the case. We all believe what we want and Good Luck to us all.

 

[DionysusToast]

As DT has contributed a lot of useful information in relation to trading, I will allow him to say when we should move back to the US stocks section.

I am willing to stay here as long as it takes, but when DT feels the time is right we shall move back and continue where we left off.

We are very close to getting the basics clarified, for without the basics the US stocks section will be of no use to anyone, what so ever.

A change is as good as a rest. I think this thread needs to cool down a bit. Sometimes, in the heat of argument, we challenge things without really considering them. Later, on reflection, we mellow out and consider all sides.

Perhaps a return to the US stocks would be in order after which we could enjoy more debate on RTA.

 

[Splitlink]

A change is as good as a rest. I think this thread needs to cool down a bit. Sometimes, in the heat of argument, we challenge things without really considering them. Later, on reflection, we mellow out and consider all sides.

Perhaps a return to the US stocks would be in order after which we could enjoy more debate on RTA.

I knew you'd have to beat the drum for them US stocks!

 

[MrGecko]

Disclaimer: Haven't poured over the whole thread, ain't going to.

* Alot of the early posts seem to claim opinion as fact (e.g. hammer / headache analogy)

* the modus operandi of "RTA" (as in a mechanical rule for trading in and out of the market based in technical indicators) is fundamentally at odds with the mechanics of the markets.

* Plato's allegory of the Cave: traders choose to believe RTA works because they can't cope with not understanding. Just like religion.

* There are various forms of information: Fundamental (information generated externally from the market) and Technical - information generated by the market. This can be further split into two categories, Qualitative and Quantitative. Each has their place.

* It's difficult to make any money until you have total faith in your beliefs about the way markets work and your ability to apply yourself accordingly.

* The market has never asked me why I put a trade on, I just put it on.

* Traders align the grounds for a trade with the correct strategy to profit from it. When Bill Gross said "Canadian bonds will outfperform" he wasn't talking about the next 5 mins.