If you want to fail as a trader, study TA

[SH-101]

Interesting stuff DT. In truth I have absolutely no place in the FX market because I spreadbet rather than use DMA - however I do use an entirely technical approach and have done so for my living for more than half a decade. I'd say I do have more than enough experience to understand the marketplace, and what my setups are telling me about how the participants are trading, which helps with trading successfully even if it actually has no bearing on my trading - I trade my setups regardless of the conditions.

I am one of these traders who does put losing trades down to probability. My technical setups give me an edge, but they don't give me certainty. That's why I choose not to think in terms of an individual trade because any trade I take could go either way, but over a sample of a number of trades my edge is proven to provide a profit.

As for keyboards - some call it playing, some call it noise, I'm not entirely sure

 

[DionysusToast]

Devilicus - you miss the point being made by those of us who are now being branded FA purists.

I am not a purist at all. It is purism that is wrong. The use of TA alone is what is wrong. The use of some TA when combined with knowledge of the specific market, who the players are, how they play the game, what fundamental events cause price moves and in shorter timeframes, how to read buying/selling presssure is what we are saying is necessary.

Obviously, on top of this - most mainstream TA is nonsense anyway.

 

[SH-101]

which helps with trading successfully even if it actually has no bearing on my trading

Well that didn't make sense what I meant was that it helps to have that knowledge in general but it actually has no bearing on my trading.

Think I should nail my colours to the mast as it were - I use pure TA, nothing else, nada, zip

 

[jon1971]

DT, something else I got from your trade activity screen, is 3 quick scalps within a matter of minutes. This tells me that you don't have the patience to wait for a probability set-up. Which is why you probably can't get along with TA, it requires patience to wait for your preferred indicators to align for a probability scenario to set-up.

Let's have a look at your equity curve instead, you can do that on Tradestation can't you.

If it's impressive, I'll naff off and won't darken this discussion again. Better still, if it's that impressive I'll pay you good money to teach me your method, so long as it's not frantic sweating trying to predict the right edge, (as I suspect it is).

PS. Choppy thin market = avoid like the plague (for me anyway).

Also (just read your later post), I know I said I was a 99% percent Technician, that I'll admit was an exaggeration, and I do put some value in fundamentals.

 

[Traduk]

DT,

I reached a point where the desperation of realising that TA didn't work threatened to end my trading aspirations but instead of taking the losers route and joining the massive band of naysayers I set about finding out what was wrong. The answer is as simple as applying bespoke measures to current market dynamics with regards to volatility, range etc.

Backtesting with a computer program cannot allow for those variables so results are going to be less than stellar but used in real time at the right edge adjustments can be made. Of course it requires enough knowledge of price structure not to need indicators to actually get any value from them.

I suspect your bitterness towards TA is based on the time you wasted with it and for however much of your life you wasted, mark that down as a personal failure. There are answers but not for those who will not seek them.

Thank you for posting your trades. How much gearing do you day trading stock traders get because nickels and dimes for a handful of cents on fairly big value stocks ($70) would require 10K shares to even make a shot worth any effort. What you guys do looks awfully like the reverse logic that undid LTCM by chasing cents with mega dollars.

 

[kimo'sabby]

What about real, live trading where you can't see the right hand side of the chart ?


Nobody knows the future, from option sellers to indicator systems, the market will prove all methods wrong at some point.

 

[dealer911]

DT,

I reached a point where the desperation of realising that TA didn't work threatened to end my trading aspirations but instead of taking the losers route and joining the massive band of naysayers I set about finding out what was wrong. The answer is as simple as applying bespoke measures to current market dynamics with regards to volatility, range etc.

Backtesting with a computer program cannot allow for those variables so results are going to be less than stellar but used in real time at the right edge adjustments can be made. Of course it requires enough knowledge of price structure not to need indicators to actually get any value from them.

I suspect your bitterness towards TA is based on the time you wasted with it and for however much of your life you wasted, mark that down as a personal failure. There are answers but not for those who will not seek them.

Thank you for posting your trades. How much gearing do you day trading stock traders get because nickels and dimes for a handful of cents on fairly big value stocks ($70) would require 10K shares to even make a shot worth any effort. What you guys do looks awfully like the reverse logic that undid LTCM by chasing cents with mega dollars.

LTCM blew up due to a mixture of arrogance and leverage - - Time is recognised as a big risk - Time is one of the components used in options pricing and is given a value - If you are in a trade for a shorter period of time it reduces your risk but you NEED the leverage to make any money - DT's strategy is fine and used by prop desks and hedge funds the world over - DT's trading style works for him - If you have some decent indicators that you trust and work for you then fine..stick with it.

 

[SH-101]

DT's trading style works for him - If you have some decent indicators that you trust and work for you then fine..stick with it.

Indeed - there does seem to be some odd fundamentalism on this forum. I trade with TA and nothing but, but I'd never dismiss FA or anything else as crap / useless / pointless. I have nothing but respect for anyone who can make consistent money regardless of their style/ chosen timeframe / chosen market etc etc!

 

[Traduk]

LTCM blew up due to a mixture of arrogance and leverage - - Time is recognised as a big risk - Time is one of the components used in options pricing and is given a value - If you are in a trade for a shorter period of time it reduces your risk but you NEED the leverage to make any money - DT's strategy is fine and used by prop desks and hedge funds the world over - DT's trading style works for him - If you have some decent indicators that you trust and work for you then fine..stick with it.

I am well aware of option strategies as I have archive boxes filled with hundreds of contract notes. I used to sell dozens of index straddles and they were damn good earners providing the index stayed within a range. It was when they broke out that trouble happened and broker after broker, that I used at the time, got stuck with the bill for idiots that vanished leaving mega losses behind.

The point I was wishing to make was that DT uses scalps that last minutes for stocks that move 11cents, in that period, and IMO to make it worth while to me I would need at least 10K shares which on a $70 stock is $700K which without gearing requires a fairly hefty trading balance to chase $1.1K minus ex's. If no real gearing is available and small numbers of shares are traded then it all looks like playing for pocket change.

 

[kimo'sabby]

I am well aware of option strategies as I have archive boxes filled with hundreds of contract notes. I used to sell dozens of index straddles and they were damn good earners providing the index stayed within a range. It was when they broke out that trouble happened and broker after broker, that I used at the time, got stuck with the bill for idiots that vanished leaving mega losses behind.

The point I was wishing to make was that DT uses scalps that last minutes for stocks that move 11cents, in that period, and IMO to make it worth while to me I would need at least 10K shares which on a $70 stock is $700K which without gearing requires a fairly hefty trading balance to chase $1.1K minus ex's. If no real gearing is available and small numbers of shares are traded then it all looks like playing for pocket change.

Agreed, or more trades, but then he's open to getting more wrong or losing more, which he may not personally/psychologically be able to handle.

 

[dealer911]

If no real gearing is available and small numbers of shares are traded then it all looks like playing for pocket change.

Why would no gearing be available ? - Why would he trade in an iliquid market with a small number of shares traded ? - It is indeed as you say picking up pennies in front of a Steam Roller - and brokers will LOVE you for all the comm you pay - but still valid enough strategy for some people.

 

[DionysusToast]

DT,

I reached a point where the desperation of realising that TA didn't work threatened to end my trading aspirations but instead of taking the losers route and joining the massive band of naysayers I set about finding out what was wrong. The answer is as simple as applying bespoke measures to current market dynamics with regards to volatility, range etc.

Backtesting with a computer program cannot allow for those variables so results are going to be less than stellar but used in real time at the right edge adjustments can be made. Of course it requires enough knowledge of price structure not to need indicators to actually get any value from them.

I suspect your bitterness towards TA is based on the time you wasted with it and for however much of your life you wasted, mark that down as a personal failure. There are answers but not for those who will not seek them.

Thank you for posting your trades. How much gearing do you day trading stock traders get because nickels and dimes for a handful of cents on fairly big value stocks ($70) would require 10K shares to even make a shot worth any effort. What you guys do looks awfully like the reverse logic that undid LTCM by chasing cents with mega dollars.

Again, you miss the point being made.

I am not bitter about TA, it's just that most pepole touting it on forums like this are not even trading. I use TA every day - just not the stuff discussed on line or in books I also do not use it in isolation. I also use TA to find swing trade candidates.

It is this 'regular TA' in isolation that doesn't work. That is my point. You see people recommending things to others on the internet that clearly don't work. People want a set of simple rules that works in any market, up or down. TA promises that but doesn't deliver.

As for yesterday - not a great day. It is very thin & choppy right now. The approach is basically a 'scalpers' entry with a view to turning it into a longer term trade. The idea being that you get in on a setup only if you see confirmation with buying/selling pressure to give you a pop on the entry. It just happens that yesterday there was a lot of chop and none turned longer term. On such days, I generally wind things up instead of spending time looking at choppy charts.

I generally don't like to discuss actual amounts made - but in the 45 minutes shown on the screen shots, the amount made was roughly $1,100 after fees. Maybe you are one of T2Ws many billionaires and such amounts are trivial - to me that'll get me some new bodywork on the Pajero when the missus reverses it into a lamp post.

No stock trade was over 1000 shares and no option trade over 50 contracts. The option trade is a different technique - something I'm trying for size.

 

[Traduk]

Why would no gearing be available ? - Why would he trade in an iliquid market with a small number of shares traded ? - It is indeed as you say picking up pennies in front of a Steam Roller - and brokers will LOVE you for all the comm you pay - but still valid enough strategy for some people.

Addressed to DT, I asked how much gearing do you guys get. I vaguely recall reading 4:1 but asked the question for clarification.

I did not refer to illiquid markets but based on the latest trading account an outright purchase of a $70 stock in sufficient quantity to yield a reasonable profit (in my eyes) requires $700K. Judging by past trading accounts he has shown, he uses tiny numbers of stocks with equally tiny results. What he shows is quite commendable but I suppose my interest lies in the question of unless its meaningful why bother.

 

[jon1971]

DT you're the one who's opinions seem to change with the wind, I've not contradicted myself once. I've not rubbished TA and then said later oh actually there are a couple of oscillators that I use in my methodology. Where have I said that?

I'm not even trying to defend TA, I have my own set up and I'm happy with it. I'll review it's performance once I have a suitable sample size and make tweaks if necessary.

This is a psychology forum, right?

So I'd be grateful if we could discuss the psychological attitude required to trade a TA set up. If you could refrain from shouting down anyone who dares offer an opinion, that would be terrific.

And I don't really want to see your equity curve, I really couldn't care less, although how exactly does a few cents on a sub thousand lot equate to $1100?

 

[kimo'sabby]

Is there an actual point to trading stocks, if a retail trader is only going to choose an illiquid choppy stock and trade with no size? It's bloody outrageous if you ask me.

 

[montmorencyt2w]

Well that didn't make sense what I meant was that it helps to have that knowledge in general but it actually has no bearing on my trading.

Think I should nail my colours to the mast as it were - I use pure TA, nothing else, nada, zip

With all due respect (since only you know what you actually do), when you said;

I'd say I do have more than enough experience to understand the marketplace, and what my setups are telling me about how the participants are trading, which helps with trading successfully even if it actually has no bearing on my trading - I trade my setups regardless of the conditions.

I think you are admitting that in addition to any TA that you use, you are bringing in all this market knowledge and experience and knowledge of the other participants, i.e. it is not purely TA and nothing else. And this market knowledge and experience and knowledge of the other participants is not what can be learned from the average technical trading book.

I would suggest this goes for a number of other traders here who appear to be trading purely technically, but in reality are working in highly discretionary ways, i.e. they are bringing to bear all that experience which it would actually be quite hard to write down in any kind of "how to" guide.


By the way, I think that this thread is valuable, whether you agree with DT or not.
When I first joined T2W, it seemed that most postings of most threads operated under the implicit assumption that TA "obviously" worked, and that as soon as you learned enough about it, it would eventually start working for you, given sufficient discipline and good psychology. You didn't have to learn how the markets worked; you didn't have to learn anything about "funnymentals", because "everything you need to know about the market is contained in the price".

Now I realise that there are people here who don't share that view and there are threads around that don't operate on that assumption, but it is not too often on here that TA is openly challenged and asked to prove itself. DT has therefore done this forum a service, even if some people (not me) regard it as some sort of exercise in ego-boosting.

Assumptions should always be questioned, and anything that seems obvious should be especially questioned.

 

[redart]

If one was to concede and say, 'OK, TA is useless' does anyone have any advice on how to best to persue the alternatives?
There are a million threads about how to trade using 'X' technical approach, but I haven't found much about how to use 'funnymentals'/'how participants are trading' etc. for short-term trading.
Are there FA books you can recommend to me Dionysustoast?
thankyou

 

[SH-101]

I think you are admitting that in addition to any TA that you use, you are bringing in all this market knowledge and experience and knowledge of the other participants, i.e. it is not purely TA and nothing else. And this market knowledge and experience and knowledge of the other participants is not what can be learned from the average technical trading book.

Appreciate what you're saying mate but those kinds of "market knowledge" aspects you're talking about are "abstract" concepts in a way, and I'm not even sure what they would be. I never once think of what the "big boys" are doing; I don't pay any attention to fundamentals, option barriers, fixing hours, triple witching, anything like that. Concerning myself only with FX, things like level 2 and volume don't come into it. Nothing other than my technical setups goes into the thought process of my trades.

Actually that's not entirely true - twice last month I jumped out of a trade early because I allowed myself to become swayed by the market's reaction to a fundamental release - first time I ended up with a scratch trade in what would have been a scratch trade anyway; second time I ended up with a scratch trade instead of the 9% profit I would have had had I paid attention purely to the techs - these kinds of lapses are the kind of thing I need to work on even after years doing this for a living.

If, for example, I see a market retracing lower in an unexhausted uptrend, trading into a cluster of support levels and setting up the kind of technical signal I look for then I'll be all over it. Nothing else needs to be known

I did this last Wednesday when I entered long on AUD/USD - a position I held over Friday's NFP because the technicals told me to. Eventually came out with a nice profit last night.

BTW You can see some examples of the kind of thing I do in my journal - including the recent AUD/USD trade. All my trade entries are called in advance

 

[SH-101]

BTW I would like to be clear that I'm not saying a pure TA approach like mine will work for everyone, but if I can do it I don't see why plenty of others shouldn't be able to as well - it's just about practicing, learning and finding what works for you. Like I said earlier, my views are based on my experiences of the FX market both on an intraday basis and in more recent years as a swing trader.

Since finding my "niche" I've never attempted to trade any other type of market so I'm not going to sit here and say that it will work for everyone on every market all the time, any more than I necessarily think others should say it will work for no-one on no market...

 

[kimo'sabby]

If one was to concede and say, 'OK, TA is useless' does anyone have any advice on how to best to persue the alternatives?
There are a million threads about how to trade using 'X' technical approach, but I haven't found much about how to use 'funnymentals'/'how participants are trading' etc. for short-term trading.
Are there FA books you can recommend to me Dionysustoast?
thankyou

You've no chance of someone like DT, 'just spitting it out', that would really ruin his show. If he's reading the book and placing small limits in and around the bigger players and hoping for them to get matched, he won't like to tell you this, because that's it then the cryptic game is over. Still only a game of probability, and really only viewing volatility in a different manner.

Where's the expert, he's gone all quiet.