Someone posted a chart with a couple breakout plays on them. They're valid trades of course but understand that it's all in the money management that makes them possible in the long run. There are just as many or more false breakouts as there are true ones. I don't really think that's TA though. Playing off prior reversal levels is about as basic as it gets, every kind of trader watches those numbers and you don't need any charts up to know where those levels are. Technical analysis is indicators. Price derivatives on time series. Absolutely meaningless. Of course you can make a strategy work with indicators, but it isn't the indicator that's making the strategy work. It's the money management.
There's a bunch of talk about price action going on. I believe price action is a valid concept, however anything that the price does is incidental to the volume. All the action is in the volume, and the price just gets towed along.
All you guys trading with forex brokers should read Reminiscences of a Stock Operator if you haven't already. It was written about events over a century ago but has lots of talk about bucket shops in them. It's really funny reading about it in 2012 because they operate exactly the same as they always have!
Got a few comments on this.
1) TA is not just indicators. Classic TA as taught in Edwards & Magee is price action mostly.
2) Indicators are indeed derivatives of price, but they show price action in a slightly different manner, sometimes smoothed, showing relations between the moves etc. Some people find it useful and interpret indicators better, than naked price. Why not? Having said that, I am not one of those people, I prefer just price with maybe EMA on it and that's it.
3) This volume/price holy war seems to be endless. But I have yet to see someone trading on volume
without price.
We trade price changes, not volume changes, so price is priority of analysis IMO.
4) I have read Livermore long ago. Trade with a well known "bucket shop" (Oanda) for almost as long (since 2005). Along with it I also trade through "normal broker" (IB). I see no difference, except that deal costs @ Oanda are usually smaller (except the fast market conditions, that's when I switch to IB and trade either spot FX through their ECN platform or 6E) and there's no slippage with Oanda beyond 0.1-0.2 pips most of the time.
Does it mean I should stop doing what works, because Livermore or someone else said bucket shops suck a hundred years ago? :cheesy:
P. S. Having said above on bucket shops, of course there are many, many scams in this industry. But some of "retail FX" companies are legit and have good reputation. One just has to be cautious, not scared.
