TA does/doesn't work thread with a difference.

[scose-no-doubt]

During my time on T2W, there has always been a bias in favour of TA among the users as a whole. Personally I lean more towards the TA being voodoo camp with short term prices being drive by orders and medium/longer term prices driven by other things for the most part but lets not go into that now.

Anyhews, I was hoping to start a thread where anyone can post charts where TA DOESN'T work as a counter argument to the 1m charts we have showing TA is gospel. Maybe then we could discuss how and why we think it didny as opposed to the argument that TA works because it does etc etc.

Any related discussion or opinions are also welcomed.

 

[bbmac]

I think you miss the point

All TA does is to represent repeating patterns of market behaviour...there are patterns in life, nature, science and mathematics and it is beyond dispute that many repeat. Patterns composed of tech analysis merely represent these repeating patterns of market behaviour- on a chart. These patterns give us an edge that is all....but it is an edge because these market behaviour patterns repeat (as represented by the TA pattern.)

I certainly have never argued that TA is gospel, but it is beyond dispute that used correctly these patterns repeat...

Of course not all patterns that repeat play out and this is part of any trading edge. Ie when a pattern develops ...we pays our money (the risk) to see whether it will play out for a gain,..to this extent there will be plenty of times that 'TA doesn't work' but the patterns that don't produce a gain are just statistical occurences in an overall sample of a tech trading edge.

I do buy into the idea that TA may be self fulfilling even if there is little empirical evidence to support that. For eg I wonder how many people buy or sell a pinbar when they see one etc...

It's not a question of TA does or does not work, it is merely a tool from which we can derive a trading edge. Some Trading edge's will 'work,' - some will not, over time.

During my time on T2W, there has always been a bias in favour of TA among the users as a whole. Personally I lean more towards the TA being voodoo camp with short term prices being drive by orders and medium/longer term prices driven by other things for the most part but lets not go into that now.

Any hows, I was hoping to start a thread where anyone can post charts where TA DOESN'T work as a counter argument to the 1m charts we have showing TA is gospel. Maybe then we could discuss how and why we think it didnt as opposed to the argument that TA works because it does etc etc.

Any related discussion or opinions are also welcomed.

 

[bbmac]

When a pattern comprised of TA factors doesn't work it is because the probability of a successful outcome [represented by the historical precedent of that pattern over a large sample]...didn't, on that occassion play out.

Anyone can post up a screenshot of a failed pattern but this is not conclusive evidence that TA does not work. The more relevant question is whether TA can be made to work by market participants for a consistent gain from their chosen markets.

G/L

 

[Devilicus]

Or how about posting up an example of where fundamental analysis didn't work, or where evidence in the order book suggested an upmove, only for the price to drop.....

 

[scose-no-doubt]

Or how about posting up an example of where fundamental analysis didn't work, or where evidence in the order book suggested an upmove, only for the price to drop.....

Why would I do any of the above in a TA thread?

 

[DashRiprock]

TA like all the other things is just information. there is good TA information and there is bad TA information. it depends on what TA information you use (and what you don't), how you try to use it and how good you are at doing that.

TA on its own can't work or not work it just is.

 

[Martinghoul]

What about the infamous Tom DeMark debacle? Isn't he like the Numero Uno Master of TA?

http://www.businessinsider.com/tom-demark-cnbc-2011-2

 

[scose-no-doubt]

I think I'd probably class yourself as the T2W authority on TA from what I've seen

I think you miss the point

All TA does is to represent repeating patterns of market behaviour...there are patterns in life, nature, science and mathematics and it is beyond dispute that many repeat. Patterns composed of tech analysis merely represent these repeating patterns of market behaviour- on a chart. These patterns give us an edge that is all....but is an edge beacuse market behavious patterns repeat (as represented by the TA pattern.)
Depending on the TF then is this not just a function of the orders only with less information?

I certainly have never argued that TA is gospel, but it is beyond dispute that used correctly these patterns repeat...

Of course not all patterns that repeat play out and this part of any trading edge. Ie when a pattern develops we pays our money (the risk) to see whether it will play out for a gain,..to this extent there will be plenty of times that 'TA doesn't work' but the patterns that don't produce a gain are just statistical occurences in an overall sample of a tech trading edge.

I do buy into the idea that TA may be self fulfilling even if there is little empirical evidence to support that. For eg I wonder how many people buy or sell a pinbar when they see one etc...

It's not a question of TA does or does not work, it is merely a tool from which we can derive a trading edge. Some Trading edge's will 'work,' - some will not over time.

Over what T/Fs would you say that you find TA can give an edge, BB?

 

[DashRiprock]

What about the infamous Tom DeMark debacle? Isn't he like the Numero Uno Master of TA?

http://www.businessinsider.com/tom-demark-cnbc-2011-2

i think demark gets good name because bbg have his countdown and sequential and as well a chatroom for institutional traders. so it is more of a self fulfulling thing because you have more money following it that anything else.

IMO selling 'cos up 9 up and 4 down after 13 or whatever doesn't really make much sense. like its not very good information. lets see if hes as good when he starts to charge $500 and people leave the chatroom

 

[temporarilylight]

Or how about posting up an example of where fundamental analysis didn't work, or where evidence in the order book suggested an upmove, only for the price to drop.....

Now that could lead to an interesting thread.

 

[Black Swan]

I think you miss the point

All TA does is to represent repeating patterns of market behaviour...there are patterns in life, nature, science and mathematics and it is beyond dispute that many repeat. Patterns composed of tech analysis merely represent these repeating patterns of market behaviour- on a chart. These patterns give us an edge that is all....but it is an edge because these market behaviour patterns repeat (as represented by the TA pattern.)

I certainly have never argued that TA is gospel, but it is beyond dispute that used correctly these patterns repeat...

Of course not all patterns that repeat play out and this is part of any trading edge. Ie when a pattern develops ...we pays our money (the risk) to see whether it will play out for a gain,..to this extent there will be plenty of times that 'TA doesn't work' but the patterns that don't produce a gain are just statistical occurences in an overall sample of a tech trading edge.

I do buy into the idea that TA may be self fulfilling even if there is little empirical evidence to support that. For eg I wonder how many people buy or sell a pinbar when they see one etc...

It's not a question of TA does or does not work, it is merely a tool from which we can derive a trading edge. Some Trading edge's will 'work,' - some will not, over time.

Mark Twain is alleged to have said; “History doesn't repeat itself, at best it sometimes rhymes”..

There is little dispute that he did say; “It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.”..

You know what you know *works*..just smile and move on..

 

[bbmac]

I think I'd probably class yourself as the T2W authority on TA from what I've seen Over what T/Fs would you say that you find TA can give an edge, BB?

Lol..the operative word there ! The patterns I trade repeat on any t/f from 1min to monthly but I operate out of choice on the 1min 5min and 30min t/f combo.

I often hear it said on the gbpusd rolling thread over @ ff.com that for eg '...momentum is diminishing on the 5min ...' and I chuckle as it demonstartes a lack of understanding about price, ta etc...there being only one momentum and that belongs to price...the 5min chart is just a representation of price over 5min periods and the TA analysis applied to this t/f suggest's that price momentum may be diminishing. TA dedrived from price and price itself is such that the longer we wait the more info we have about porice so that a 1hr t/f will give us more info than a 1min...this is why confluence is so importnat particularly but not exclusively on the smaller t/f's - to help compensate for the lack of price info.

The point I am really making with the eg above is that many participants using TA do not really understand what it may be telling them about price and it's limitations in doing so.

G/L

 

[DashRiprock]

as well can i say something else?

this has happened on 2 blogs ive read now about people saying "the market has repeatable patterns" and then going back in historical data and looking for some pattern that worked in the past, testing on out of sample data and then trading.

this to me is silly and is not what "repeating behaviour" is.

"repeating behaviour" is some kind of bevaviour that can cause the right trading strategy to make profits. so things like

"because people on average dont like to be the loner, after a while they all have the same view and price trends can occur"

or

"not all market participants react to new information at the same time, if you are very fast you can sometimes sell your position to the latecomers"

or

"in the short term, markets over react, but in the longer term, markets under react"

or

"people are driven by feer and greed, and this can make bubbles / crashes"

and so on and so on.

this is what repeatable behaviour is, not overbought divergence.

 

[bbmac]

Mark Twain is alleged to have said; “History doesn't repeat itself, at best it sometimes rhymes”..

There is little dispute that he did say; “It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.”..

You know what you know *works*..just smile and move on..

It's a repeating pattern....

 

[Black Swan]

It's a repeating pattern....

Every moment, in any market, is unique..

 

[bbmac]

Firstly there is no such thing in TA as 'overbought' divergence.

Secondly your comment
'...this is what repeatable behaviour is, not overbought divergence.' is wrong. Oscillator divergence suggests a repeating pattern, ie that momemntum of price may be dimishing sufficient for buyers to overwhelm sellers or sellers to overwhelm buyers to cause a reversal in prevailing pa direction...this is a repeating market pattern based on supply and demand informing us that an imbalance may repeat sufficient to turn the market (for howsoever long.)


G/L

as well can i say something else?

this has happened on 2 blogs ive read now about people saying "the market has repeatable patterns" and then going back in historical data and looking for some pattern that worked in the past, testing on out of sample data and then trading.

this to me is silly and is not what "repeating behaviour" is.

"repeating behaviour" is some kind of bevaviour that can cause the right trading strategy to make profits. so things like

"because people on average dont like to be the loner, after a while they all have the same view and price trends can occur"

or

"not all market participants react to new information at the same time, if you are very fast you can sometimes sell your position to the latecomers"

or

"in the short term, markets over react, but in the longer term, markets over react"

or

"people are driven by feer and greed, and this can make bubbles / crashes"

and so on and so on.

this is what repeatable behaviour is, not overbought divergence.

 

[bbmac]

Every moment, in any market, is unique..

There is a very high probability to almost certainty of that yes,...but it doesn't stop patterns repeating because the market is comprised of human beings and whilst when the next TA pattern develops there may be different participants than the other times, we all have the same basic emotions.

G/L

 

[scose-no-doubt]

So has anyone got any charts or what?
I just said lets bang up a few examples of TA not working and discuss them in the same way that winners have been discussed in many threads in the past. If anything it was to better my understanding of TA principles not a dig at TAers.
If I'd have started a post charts proving TA works and discuss I bet the thread would have been inundated. Am I to assume you all have a 100% hit rate?

 

[bbmac]

Pattern fails

Here is an example of afailed pattern....and the reasons why

You can see below 15min was ina weak uptrend with a HH being printed after 2 X HL off this morning's current daily lo in cable...the 3min then developed a repeating hidden divergence pattern indicating that a re-entry into the 15min uptrend at the broken 15min H (previous resistance=potential support) may be a good entry after the pullback from the 61.8% fib of the intraday fall...but this set-up came @ a 2nd LL even though that was a potential HL on 15min...this was not therefore hi in probability and as this 15min uptrend was contra the 1hr downtrend this added to the reasons to ignore it, the 15min uptrend being more probably a pullback in the 1hr downtrend.

My point is: You gotta use TA intelligently with the flow of price and what it may be telling us.

G/L

 

[bbmac]

re post 19 above

Up @ that 61.8% of the last 1hr LH-LL (current daily Hi-LO) was a 15min repeating hidden divergence pattern....again not optimum as it set-up @ that 61.8% @ a HH on the 15min co-existing as a potential LH on 1hr but better than the set-up above.

The higher t/f set-up won out.

G/L