Social Proofs

[ducati998]

"Where all think alike, no-one thinks very much"

After the summary closing of the thread on the request for a definition of "Price" within the "Price & Volume" forum, which was to be expected, as a previous post had also been subjected to an arbitrary decision, the psychology section became the natural choice.

Interesting also that with most traders ascribing great weight to the importance of psychology to trading, there are ..........count them 2 threads.

The outcome of the ill-fated thread was in essence that "price" has its utility expressed as a "Chart".......this really was my question, price action is only a chart, and all the semi-religious zeal of price and volume is the reading of a chart without any technical indicators included.

Chart reading is really at its core the attempt to predict, and profit from price momentum. This is driven by a variety of factors, none of which are apparent at first glance. We have technical traders, in a variety of timeframes, purely concerned with price momentum, we have investors, concerned with value, and we have "the others" concerned with commisions, fees, etc.

So, from a technical perspective, the reality of trading is the trading of sentiment.
This should be obvious to anyone trading any market, as, news is released, in this case good news, and the market or your stock tanks, bad news, and it takes off, or completely the opposite.

Stoplosses, by their very definition demonstrate the un-predictability of the market. If you knew market direction, you would have no need of a stoploss. Therefore by using a stoploss, it is tacit admission that you are unsure, that you are trying to insure yourself against taking a large or possibly complete loss.
Stoplosses while a necessity for technical traders, are also a major contribution to the attrition of their actualised returns, and contribute along with commissions to the high failure rate of traders. Yet this is called ......Money Management, to be fair, only one aspect of money management, yet it is guaranteed to show you a loss on actualised returns annually.
Yet, find a technical forum, or thread that recommends no stoploss trading. It would seem that all think alike, and with good reason, no stops technical trading is a short cut to financial death.

What has this to do with psychology?
Well, as the quote suggested, most traders (all) trade pretty much the same way. We know this to be true as, if you can only profit from taking a % from the price trend, and its momentum, then you must be part of the herd at that moment in time.
As you constitute part of the herd, you are subject to statistical analysis from those who employ such studies.
As an example, television executives utilise "canned laughter" on comedy tv shows. Why? Speak to most people, and they will say that it detracts from the show, and they do not like it.
Statistically however it has been shown to increase audience laughter, particularly when the show is bad.
Yes, humans are lemmings. So when UBS require some inventory for a large client, price is manipulated to provide that inventory.......and the best way is to break a support line, and then profit on the upside in addition, as all technical traders depending on their speed of execution will try to catch the momentum of the move.

Now lets re-examine that "good news" stock drops scenario.
Increased earnings, stop tanks because big buyer wants 50M shares @ a specific price only.
Price is dropped, order filled, commissions paid etc, price rebounds. There are any number of variations.

It is the nature of trading that the trader is going to spend a great deal of time waiting, that is, unless he doesn't have the discipline to wait for what he wants, though he must of course also know what it is that he wants, which is where defining the setup comes in. If the trader doesn't know exactly what it is he's looking for, then he is far more susceptible to being sucked into low-probability trades, particularly if he is eager to trade. By thinking of inaction as a weapon and using it as such, he will find himself aggressively withstanding the Sirens who are tempting him to act impetuously. He will be aggressively inactive.

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight

Now for the trader sitting doing nothing, what are the consequences?
He will save money definitely on commissions, and being stopped out, so a big plus.
He will also lose out on potentially winning trades, a negative.

The Livermore quote requires some context. If you go to pg 69 of Reminiscences, you will see it is in the context of staying in a big move....in this case a bull market.
Within another example of a big win, regarding the San Francisco earthquake, this was a value play........in fact, he states quite clearly that speculating on price fluctuations is a losers game. This from generally acknowledged one of the best tape readers of his and possibly any era.

Food for thought.
d998

 

[TheBramble]

An interesting bag of tricks Ducati.

BTW - I roundly support your position on the irritations of those (luckily few) forums which are subject to heavy-handed editorial whimsy. I am not prepared to subject my intellectual output (deemed however useful/useless by others) to the over-riding control and amateur evaluation of any other member.

The stoploss issue is interesting. Clearly is does contribute to the down-side of any traders bottom-line. Equally clearly, it prevents in its most general case, an even greater contribution to the negative side of a trader's bottom line. Sure, if one knew for sure where a market/instrument was headed, you wouldn't need them - but most traders are dealing with probabilities and are willing to risk X in order to find out. The X being the stoploss.

Livermore's 'sitting tight' does take on a valid new light when given in the context you explain. You're right - it's often bandied around as 'not being in the action'. I would claim that to view it in both contexts would serve well.

 

[pttrader]

"Where all think alike, no-one thinks very much"

After the summary closing of the thread on the request for a definition of "Price" within the "Price & Volume" forum, which was to be expected, as a previous post had also been subjected to an arbitrary decision, the psychology section became the natural choice.

As you know you and I have had our differences of opinions and rather harsh words at times (alot was my fault as to the words) but when someone says something that gets under everyone's skin then I take notice and listen even if I disagree or can't accept the point in question. I may attack it. I may just sit back and listen. I may laugh. But I listen!

Your thread on price that was arbitarily shut down is an example of when someone doesn't agree they just turn the water facet off. So set in their ways they can't move one little finger to possibly see another point of view. Demanding proof from others in a thread while not giving any themselves. Or not looking objectively into the proof that others do afford them. It is like "you don't fit my neat little scientific world so out you go!"

I thought you brought up a good topic for discussion even if I probally don't agree with your viewpoint but, hey, I have changed my beliefs before and I might again. I think it behooves us to listen even to those that espouse something different than us. Even if it is just a concept that has no proof! What would the world be without concepts first grabbing the imagination of men/women who then look for the proof to see if their concept is a valid concept.

So Ducati, shutting down your thread was an injustice in my books. Of course, my posts weren't looked upon too kindly either in that particular thread I was eliminated also.

PT

 

[DaveJB]

Well,
I've been erased too (and me as offensive as a fluffy bunny!) Ducati and I differerd quite volubly on a thread, I do agree that threads - and messages - should only be removed if a personal attack of some sort is involved... or one of the occasional, silly examples where somebody posts something racially bigotted etc. of course. Posts ought not be pulled simply because the majority disagree. I totally disagree with you about the subject we argued over D998, but I accept your right to disagree with me.

I would argue here that chart reading, like pretty well any representation of trading (including raw numbers coming off a tape) are all subject to manipulation - it's really a case of whether the potential profit makes the investment worth making. Equally the method one chooses to use to read the current market, share or whatever is to a degree immaterial - whatever method you use is the one that allows you to interpret what's going on. It's a map to the psychology underlying the trading.

As for stops - to me they're simply an acknowledgement that I'm not right all the time.

Dave

 

[frugi]

I think Sharky is working on a sticky to this effect, but for the moment it is worth pointing out here that:

Trade2Win allows members to have their own boards and to moderate them as they see fit (within reason). There is of course no reason or compulsion for members to use these boards if they do not like the style of the moderation therein. However, that is not to say that the moderation style of members who have their own boards is necessarily representative of the usual house style of trade2win. As a newspaper disclaimer might say "The views of our contributors are not necessarily shared by the editor." If the moderation of a member's board is irritating to others, then simply do not use it and post elsewhere on the site, where you may not be so tightly regulated. If the result of this is fewer and fewer posts on a member's board then we may eventually remove the board or suggest to the board's originator that he take a gentler approach.

 

[pttrader]

I think Sharky is working on a sticky to this effect, but for the moment it is worth pointing out here that:

Trade2Win allows members to have their own boards and to moderate them as they see fit (within reason). There is of course no reason or compulsion for members to use these boards if they do not like the style of the moderation therein. However, that is not to say that the moderation style of members who have their own boards is necessarily representative of the usual house style of trade2win. As a newspaper disclaimer might say "The views of our contributors are not necessarily shared by the editor." If the moderation of a member's board is irritating to others, then simply do not use it and post elsewhere on the site, where you may not be so tightly regulated. If the result of this is fewer and fewer posts on a member's board then we may eventually remove the board or suggest to the board's originator that he take a gentler approach.

Sounds reasonable to me.

PT

 

[pttrader]

Now, Ducati back to my question I posed on the shutdown thread.

"Ducati what makes "fundamental value" any more predicative of future price action than "TA value"? Many TA people would consider "fundamental value" as discounted in actual price action. In other words, actual price action is a reflection of "fundamental value" and "TA value" and any other value one could think to add. Just a question that is all."

PT

 

[DaveJB]

Frugi,
yep - I've heard that too... that's the problem, and it's primarily a PR one - at the moment you don't know you are on 'Mad Bert Smiths Hang Value Investors' thread, and when you post 'I quite like NAV to work out fair value' you get chopped, diced, and sent into a black hole. I hope it appears quite soon - even though I knew that was being looked at it still irks to see cases of 'blanking for disagreeing' in action. I'd actually tend to suggest that this ought not to be permitted until the 'sticky' is up and running, as the censorship creates a degree of anger when it arises, and the plus side is limited to the thread originator not having to deal with polite heckling. (Impoilte heckling would, naturally, be censored as a personal attack - no sensible member would object to that I would suggest).

Dave

 

[pttrader]

Or Ducati would you like to start another thread that deals "price" as it would be more appropriate than here I suppose

PT

 

[ducati998]

JB,

I would argue here that chart reading, like pretty well any representation of trading (including raw numbers coming off a tape) are all subject to manipulation - it's really a case of whether the potential profit makes the investment worth making. Equally the method one chooses to use to read the current market, share or whatever is to a degree immaterial - whatever method you use is the one that allows you to interpret what's going on. It's a map to the psychology underlying the trading

A number of points.
1...Manipulation, now this has a number of implications, viz, who is manipulating, what timeframe they are manipulating in, and the method of manipulation. The answers to these basic questions gives you a very different perspective and strategy that may be employed.

2...Potential Profit, and this as always is an important question. Technical traders answer generally in one of 2 ways, .....1 at an established S/R point I shall exit, or I will exit when the market exits me ( trailing stop, ATR, Chandelier, M/A etc)
The difficulty is really contained not in when or how to exit, all the above are valid, but more specifically, what probability is associated with my taking the profit. That is, will this trade succeed or fail, (stopped out with a loss)

3...The Method, and this is where our paths diverge. Technical analysis, tape reading, Gann, and any speculative undertaking are fatally flawed. Why?
Simply because you are relying upon other individuals, massed together as a group, or mob, to think for you. As soon as the squiggles on a visual chart determine your actions, you are subject to the mass hysteria of the market, and in a mob, the lowest common denominator comes to the fore, you are at the mercy of the most stupid participant.

4...Psychology, always venerated by market participants, never understood, always claiming victims, always the least important aspects discussed.

pttrader[

QUOTE]Ducati what makes "fundamental value" any more predicative of future price action than "TA value"? Many TA people would consider "fundamental value" as discounted in actual price action. In other words, actual price action is a reflection of "fundamental value" and "TA value" and any other value one could think to add. Just a question that is all."[/QUOTE]

There are many reasons. However, just the ones discussed above make an interesting starting point. All of the above criticisms can be avoided by fundamental analysis.

Frugi,

Trade2Win allows members to have their own boards and to moderate them as they see fit (within reason). There is of course no reason or compulsion for members to use these boards if they do not like the style of the moderation therein. However, that is not to say that the moderation style of members who have their own boards is necessarily representative of the usual house style of trade2win. As a newspaper disclaimer might say "The views of our contributors are not necessarily shared by the editor." If the moderation of a member's board is irritating to others, then simply do not use it and post elsewhere on the site, where you may not be so tightly regulated. If the result of this is fewer and fewer posts on a member's board then we may eventually remove the board or suggest to the board's originator that he take a gentler approach.

I have absolutely no problem with what happened. In point of fact, it was my expectation that exactly that outcome would eventuate. The reason being that within a board named "PRICE & VOLUME", no definition of price could be provided, this speaks volumes to me, and should to anyone else with an interest in P&V.

Cheers d998

 

[frugi]

d998,

Thank you for your comments; thought-provoking as ever.

Again, I would contend that price needs no definition or context (perhaps beyond that of past prices and volume) in order to be able to trade it. But I know this is not helpful so I'll leave it.

I agree with points 1 and 4.

Technical analysis, tape reading, Gann, and any speculative undertaking are fatally flawed. Why?
Simply because you are relying upon other individuals, massed together as a group, or mob, to think for you. As soon as the squiggles on a visual chart determine your actions, you are subject to the mass hysteria of the market, and in a mob, the lowest common denominator comes to the fore, you are at the mercy of the most stupid participant.

Deconstruct the P&V action correctly and you can usually, with practice, deduce the intent of the professional money, shadow their entries and exits in sufficient proximity to make consistent returns and in doing so allow the professionals to coerce the mob into doing the work for you; or indeed often to follow them into the mob if they think it temporarily advantageous to do so. Then the most stupid participant is then at your mercy, not the other way round. Either you can choose to participate blindly in the hysteria (prey) or to think objectively and take advantage of it (predator). 90% odd do not manage this, of course - or only do so after much time and study - so your general hypothesis still stands; nevertheless, exceptions exist.

This is not to say that I believe clever use of FA cannot work as well, especially in the longer term, but many of us do not have the resources to employ longer term strategies.

 

[ducati998]

frugi,

Again, I would contend that price needs no definition or context (perhaps beyond that of past prices and volume) in order to be able to trade it. But I know this is not helpful so I'll leave it.

But it is helpful........"in order to trade it", this is undoubtably true.
However, we seek to profit from it, not merely to trade it. To profit from price consistently, it needs a context, and value is the context that will ensure profitability, as the object is to "buy low and sell high".
Price in of itself with no context leaves you in the dark, and therefore you must run with the herd, as you have no idea what you have bought. Price alone steals your ability to think for yourself.

Deconstruct the P&V action correctly and you can usually, with practice, deduce the intent of the professional money, shadow their entries and exits with sufficient proximity to make consistent returns and in doing so allow the professionals to coerce the mob into doing the work for you; or indeed often to follow them into the mob if they think it temporarily advantageous to do so. Then the most stupid participant is then at your mercy, not the other way round. Either you can choose to participate blindly in the hysteria (prey) or to think objectively and take advantage of it (predator). 90% odd do not manage this, of course - or only do so after much time and study - so your general hypothesis still stands; nevertheless, exceptions exist.

Deconstruct........almost reverse engineering, but price as you have defined previously merely illustrates that a trade took place at that price, add volume, and the number of trades that took place at that level.
Deduce.........by logical reasoning, understand the motivation (or context) of the participants at that price level. Now if that were true, then that would be very useful information. I very much doubt that that is possible from purely ...1..the price,....2...the volume.
The two most common terms that attempt to describe intent, are distribution, accumulation, or, supply, demand, or support, resistance. These are abstracts that attempt to describe what other people are doing.

If you as a trader attempt to mimic others, or predict how others will think or act, you become dependant on the others for your profit. To profit consistently you must apply independant thought to the problem, understanding, how,when, and why you will be paid.

Exceptions to the rule, of course, always, but nonetheless the exceptions will have a defined advantage that will allow them to circumvent the traps that catch the average retail trader. The advantage will be structural, and not esoteric.

cheers d998

 

[Splitlink]

Well,
Equally the method one chooses to use to read the current market, share or whatever is to a degree immaterial - whatever method you use is the one that allows you to interpret what's going on. It's a map to the psychology underlying the trading.

Dave

The need to overcome the fear of changing to a new system and the fear of staying in an overnight position, with the dangers of gaps, etc. awaiting one in the morning have been put to the test by me this week, after reading your arguments on the other thread. I have made four successful trades this week based on daily trading and no losses. Clumsy sort of affairs, but they worked. Hopefully, I will improve. A definite psycholgical barrier for me to overcome.

Strangely, I never feared overnight dangers before that thread!

Split

 

[TheBramble]

Frugi,
yep - I've heard that too... that's the problem, and it's primarily a PR one - at the moment you don't know you are on 'Mad Bert Smiths Hang Value Investors' thread, and when you post 'I quite like NAV to work out fair value' you get chopped, diced, and sent into a black hole. I hope it appears quite soon - even though I knew that was being looked at it still irks to see cases of 'blanking for disagreeing' in action. I'd actually tend to suggest that this ought not to be permitted until the 'sticky' is up and running, as the censorship creates a degree of anger when it arises, and the plus side is limited to the thread originator not having to deal with polite heckling. (Impoilte heckling would, naturally, be censored as a personal attack - no sensible member would object to that I would suggest).

Dave

In the interim (or forever, for that matter) you are quite within your rights (if you had any of course) to post on any topic, say Polume or Vrice in any appropriate public forum and leave those forums less amenable to consensus and open to discussion to their own (dwindling) devices.

 

[DaveJB]

Indeed old chap,
to avoid feather ruffling all round I ought to point out that in MANY cases threads benefit from editing - it is just the fact that you don't KNOW posts are subject to it that rankles... and I know Sharky is aware of the issue. What many do NOT know is that if you navigate this site by simply going to a saved favourite and clicking view latest threads' then you do NOT see the thread 'header info' where it clearly states 'I don't want rubbish on my private thread so I'll dump it if you post it'.

(This surprises me a bit - doing it my way you see which threads have new content since your last visit ... why would anyone choose a different view?) Even more surprising is how little this seems to be understood - I've been told off (some time ago) for not reading the thread header... excuse me, some of these threads go on for 30+ pages, I have a life thanks <g>

A simple fix is some visual cue that says 'this is a restricted/edited thread' so you know the normal rules of 'post anything as long as it's not offensive' are in force. I have no problem at all with chaps like DB Phoenix, who can be a bit digital in this area, enforcing a very tight limit on what is allowed on their thread - I think it is to the benefit of the thread in most cases, and I'd err in favour of those I consider to be contributing to the site (dbp's second bow). My only gripe is that it is possible to navigate this site without seeing those warnings/disclaimers, and it then looks like censorship for not agreeing... which in most cases I don't think it is at all.

Now, how useful is the flag for where you come from? What use is yours (is your flag really a Noddy look alike? I'm surprised that Surf City is in Rutland to start with, but surely the flag should have the Beach Boys or Jan & Dean on it?) What point is there in knowing you are the leg end of a member, or I qualify for the OA Pension? On the other hand, any of these icons could be used to state 'privately modded thread' and all complaints about censorship could then be treated with disdain as 'you knew it when you posted'.

My ONLY worry about private threads is that some 'trading course salesman' could sucker people in via one, whilst squelching those who screamed a warning. I don't give a purple **** if somebody disagrees with me, I'm wrong occasionally, (obviously not very often).

By the way Tony - we're struggling to get numbers up for an Aberdeen meet on Saturday - Aberdeens only a short trip from your place (by Learjet)... why not pop up? (I'll buy you, ooooh, 2 pints).

Dave

 

[ducati998]

There was an experiment performed by a professor Milgram, where participants were instructed by the authority figure, to deliver increasingly powerful electric shocks to an increasingly distressed person who failed to answer questions correctly. In reality no real shock was delivered.

The purpose of the study was about authority, and peoples reaction to that authority. How far will they go in inflicting pain, suffering etc on another human, because they do not have the strength of character to say .....no more.

Approximately 66% of participants administered the maximum shock, not until 300 volts, and the actor feigning death or unconsciosness did anyone stop........8%

The point?
The market is perceived as an authority figure. "The market is always right", "Don't fight the market", etc.
Traders and many others have bought into this dogma wholesale, and thus become part of the unthinking, easily manipulated mob that become the statistics that show a 95% failure rate.

As for "psychological" issues, I used to spend a lot of time on this with novices and not-so-novices. But I eventually came to understand that nearly all of these so-called "psychological" problems were a direct outgrowth of the lack of an edge, i.e., a consistently profitable plan, or, usually, no plan at all. Once a consistently profitable plan was created, the "psychological issues" pretty much evaporated.

This is the text book classic interpretation of using psychology. That is to say, it is approached from an individual perspective, the individual has psychological issues. This to my mind is absolutely the wrong way to approach psychology in the context of the financial markets.

Looking at the solution, formulate a trading plan...........
This trading plan from a technical perspective would usually consist of,
1....Some form of position sizing
2....An entry plan
3...A stoploss
4...An exit
This would be based on an expectancy, defined through some form of backtesting.
The problem is that this locks you into the markets psychology, the market dictates to you, what you must do, based on your trading plan. The aberrant psychology of the market becomes the authority you cannot gainsay.

food for thought
d998

 

[JumpOff]

There was an experiment performed by a professor Milgram, where participants were instructed by the authority figure, to deliver increasingly powerful electric shocks to an increasingly distressed person who failed to answer questions correctly. In reality no real shock was delivered.

The purpose of the study was about authority, and peoples reaction to that authority. How far will they go in inflicting pain, suffering etc on another human, because they do not have the strength of character to say .....no more.

Approximately 66% of participants administered the maximum shock, not until 300 volts, and the actor feigning death or unconsciosness did anyone stop........8%

I am fascinated by the fact that the Milgram study is still so widely quoted. Certainly it was a watershed event in our understanding of behavior in the face of authority by a self selected group of males who had previously demonstrated their willingness to submit to authority in order to advance in the current system. These were almost exlusively men who had put off doing all manner of pleasureable and self directed activities in order to get the grades and recommendations necessary to get into one of the better schools in the nations. If ever there was a herd of wannabe's - these guys were it.

Would a group of artists or political activists have given the same results? How about a group of retired female nurses who were grandmothers? How about a group of West Point Cadets - (Ha, I'll bet that group would have had a shock to death rate near 90 %!)?

I suspect there are more recent and subtle and complex studies of behaviours in this kind of setting.

JO

Great topic by the way - I'll be reading this thread with interest.

 

[ducati998]

"It is easier to resist at the beginning, than the end"
L.d.Vinci

Jo,

Would a group of artists or political activists have given the same results? How about a group of retired female nurses who were grandmothers? How about a group of West Point Cadets - (Ha, I'll bet that group would have had a shock to death rate near 90 %!)?

Valid question, and who knows. It raises an interesting point however, and that is without understanding the background, motivations, prejudgices, of the people that you deal with, you operate with a lack of valid information.

I have noticed that you are a journal keeper in P&V. How does the lack of information regarding intent, motivation, etc provide you with confidence to place a trade based on nothing more than "price"

Consistency........
Consistency of action is within us a very powerful value. There is a second more perverse attraction of mechanical consistency. At times it is not the effort of hard, cognitive work that makes us shirk thoughtful activity, but the harsh consequences of that activity. By way of an example, viz.

This case study illustrates the above.
2 psychologists visited a transcendental meditation course that promised many improvements. 1 of the psychologists was an expert in the field of statistics and symboloc logic. As the lecture progressed, increasing numbers of inconsistencies were detected by this psychologist. Eventually he stood up during the questions segment, and proceeded to demonstrate the weaknesses, inconsistencies, fabrications etc in the presenters lecture.

The lecturers admitted that possibly some or all of the objections were valid.
The outcome, more people than ever signed up for the course paying $1000

Why?
After questioning some of the attendees that signed up, a pattern developed, by no means conclusive, but.............
These were people with a problem, desperately seeking a solution. They had found a potential solution in technical analysis, oooops, TM, and driven by their needs wanted to believe that TM was the answer.

Back to that statistic of 95% of daytraders, short-term speculators fail.
Technicals promise the quick fix, make loads of money, give up the day-job, yada yada.
Just look at the # of threads asking......how much, is it really possible,etc.
Then look at the answers,........yes, but,.......lots of work required, correct mindset, trading plan, system,....etc

food for thought
d998

 

[JumpOff]

I have noticed that you are a journal keeper in P&V. How does the lack of information regarding intent, motivation, etc provide you with confidence to place a trade based on nothing more than "price"
----------
These were people with a problem, desperately seeking a solution. They had found a potential solution in technical analysis, oooops, TM, and driven by their needs wanted to believe that TM was the answer.

By intent, you mean I don't know the intent of the buyers and sellers? True. I take it as a given that they are willing to buy and sell at the current price for reasons of their own. Some are closing out a profitable trade that they have had open for months, others are entering now and planning to scalp a few ticks in the next 10 seconds and then be out. Some are buying and selling because the market has reached that exquisite moment when their large transaction will turn the herd. All I can see is that they were a certain number of people willing to trade at that price. So far, I can't tell that adding volume is any help to my trading skills, - I still s*ck! My paper account is still has an equity leak that seems to get worse the more I trade!

To trade real dollars at this point would be desperate - and I am not. I'd like to make my living at trading, but at this point the whole thing is an intellectual exercise. Until I can make my paper account go up, this will remain an interesting sideline, and I will continue to earn my living as a programmer and a network admin. Your position is that TA doesn't work, and may even just be a scam designed by the brokers and such to fleece the unwitting and transfer wealth in a way that is acceptable to the people who lose their money. I'm open to that idea too, but I've had the misfortune of seeing a couple of fellows taking the sweet part of the long and short moves all day long. It was long ago and I regret I didn't pay attention at the time.

In one of your other posts somewhere you said that TA traders were all momentum traders in one form or another. I don't have a problem with that. I like to hunt and fish and I do it mostly by momentum. That creature is where I expected it to be today, because I've been tracking it, and it has some habits that are inherent in its nature. It is currently doing X, and if it continues, I will intersect it at Y, and then I will have dinner. The trick is to be aware, to be intimately familiar with the creature and its habits, so that you can see if there is discontinuation. Then you either go work on something else, or plot a new strategy.

There are people on this board who claim to be able to catch dinner, using only P &V. I'm skeptical and open minded at the same time. I haven't found any indicators that work in a mechanical way that I can understand, so I'm willing to see if I can learn how the tape readers/chartists trade. I've said before, it seems most to me like playing a violin. Someone can explain it to you a thousand times, but until you have your fingers right and the bow rosined just so, and your chin and shoulder where they need to be, you won't be able to feel that vibration go into your bones and make you ache from the wonder of it. If you have felt that even once, or observed someone else do it any time they want, then no one can convince you the violin can't be played.

If someone tells me they can play the violin and are willing to direct my own experiments in violin playing, and they are not asking for anything other than my attention, then what do I have to lose? If I work hard at it for several years and still make no headway, then I can say - I was not able to play the violin, although I practiced at it for several years and enjoyed the exercise.

Your attitude is a wonder to me. Did you lose a lot of dough trying to use TA and now you feel the need to warn us all not to follow in your footsteps?

JO

 

[ducati998]

Jo,

By intent, you mean I don't know the intent of the buyers and sellers? True. I take it as a given that they are willing to buy and sell at the current price for reasons of their own. Some are closing out a profitable trade that they have had open for months, others are entering now and planning to scalp a few ticks in the next 10 seconds and then be out. Some are buying and selling because the market has reached that exquisite moment when their large transaction will turn the herd.

And if you did know this information, do you think that it would help or hinder?

Your position is that TA doesn't work, and may even just be a scam designed by the brokers and such to fleece the unwitting and transfer wealth in a way that is acceptable to the people who lose their money. I'm open to that idea too, but I've had the misfortune of seeing a couple of fellows taking the sweet part of the long and short moves all day long. It was long ago and I regret I didn't pay attention at the time.

Some, a small percentage, 5%, will make money from a technical perspective, and they will possibly make a great deal of money, whether they end up keeping it is a question that is less clear, however be that as it may. What you will find however is that "scalpers" will very often have a structural advantage not enjoyed by your average retail trader.
As for catching bigger moves, all the successful ones that I know, 2, trade a purely mechanical system, and a number of different systems, all are extremely well capitalised, ($$M) and also can afford to sit through horrible drawdowns, as they receive a salary.

There are people on this board who claim to be able to catch dinner, using only P &V. I'm skeptical and open minded at the same time

1+1=2
6+7=13
Basic addition, this is a system that works, and works for everyone, once they learn the rules.

By comparison, P&V,
$56, $23, $22, $21,
$19.34, $19.99, $20.78, $21.08
Give me an analysis based on this price action?
Somewhere in your analysis, after you define an entry point, you will have a stoploss. Why?

If someone tells me they can play the violin and are willing to direct my own experiments in violin playing, and they are not asking for anything other than my attention, then what do I have to lose? If I work hard at it for several years and still make no headway, then I can say - I was not able to play the violin, although I practiced at it for several years and enjoyed the exercise.

Fair enough, no argument there.

Your attitude is a wonder to me. Did you lose a lot of dough trying to use TA and now you feel the need to warn us all not to follow in your footsteps?

I've already answered this one, however, I have hung around as previously stated it behooves me to understand market participants, and daytraders, technical traders provide volatility. Volatility is a phenomenon that I can exploit and profit from, therefore I like to see how the wind blows. It is obvious that I will never change anyones mind as to the futility of T/A.

cheers d998