The Problem with Technical Analysis

Apr 4, 2016
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#16
We were talking about retracements, not big candles. As usual you seek to twist things to suit your own agenda :).
How was I to know ? I wasn't into TA. One candle two candles, they look all the same to me.

Let's put the big candles aside, this retracement candles work then ?
 

dbphoenix

Well-known member
Aug 24, 2003
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#17
Very wise, as my next point was going to be - what if we take price off a chart? How will that affect TA? We would then have to move onto the nuts and bolts of the market -

We are left with time and movement (baring a set tick chart of course).

Retracement = movement, not numerical, but physical.

So ultimately, what would the real benefit be to using calculations based on an independent number in the past?
If you were to remove price from the chart, you'd be getting back to traditional technical analysis, i.e., the analysis of price movement, specifically the trader behavior that moves price. Several decades ago, a "trading for dummies" attitude took over, and indicators became the sine qua non for beginning traders in particular (and those who sold products and courses to beginners). After all, any idiot can buy or sell when the red line crosses the green line. And now that people are at last beginning to realize that it's all nonsense, technical analysis gets a bad rap. But if they were to examine the origins of technical analysis, as distinct from fundamental analysis, they'd find a wealth of useful information.
 
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wallstreetwarrior87

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Oct 14, 2009
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#18
If you were to remove price from the chart, you'd be getting back to traditional technical analysis, i.e., the analysis of price movement, specifically the trader behavior that moves price. Several decades ago, a "trading for dummies" attitude took over, and indicators became the sine qua non for beginning traders in particular (and those who sold products and courses to beginners). After all, any idiot can buy or sell when the red line crosses the green line. And now that people are at last beginning to realize that it's all nonsense, technical analysis gets a bad rap. But if they were to examine the origins of technical analysis, as distinct from fundamental analysis, they'd find a wealth of useful information.
Exactly!

All of this seems to get missed. But, if we delve further, we get so much useful information as you say. Then we really can analyse the market from a "TA" POV, and it really starts getting interesting:
 
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Aug 6, 2017
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#19
That would make sense if future price is indeed determined by price in the past. Your argument is based on that assumption which I think is doubtful. You could say equally that future pattern of prices is determined by past patterns - which most ta is based on. Just substituting numbers for patterns makes no difference.
Yes, I have rephrased that part, hopefully that will make the point better. Sorry but that was written at 2 in the morning.
 
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#20
Hi wisefoolx - You've followed a line in your opening post concerning TA that many critics of some TA approaches or even TA as a whole often use.

You've suggested that your approach is better, which is fine and might well be correct for all I know. But in order to demonstrate this you've selected aspects of TA that are inherently weak, the implication being that all TA-based traders equally respect these weak approaches.

If you had only set out to criticise trend-lines and RSI I'd be right behind you. Or if you were showing better types of trend-line TA or a better way to use them and RSI.

But as it is I think you just might be dragged into the usual circular arguments. Are you going to say more about your own approach?
I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are..., only stating that the most of it is SUBJECTIVELY calculated.

Indeed if you read correctly, I did add that one could use both tA and maths together.

And I have stated what my approach , please re-read.
 
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#21
Because every market is different. Some markets are used to hedge, and some are more the domain of directionally based decisions.

So TA in "any form" can not be used with any consistency, whether it "works" or not. As the underlying calculations are based on different meanings although its a "physical" number. Its more to do with what the number represents.

Numbers in the future are determined by a lot more than numbers in the past, more to do with time and opportunity, but thats another thread:rolleyes:
Yes, I have rephrased that part, hopefully that will make the point better. Sorry but that was written at 2 in the morning.

Anyhow, despite that , numbers are numbers and the analysis should be based n that ( ie. maths) to keep it the calculations OBJECTIVE. That is my point.
 

tomorton

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Feb 28, 2002
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#22
I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are..., only stating that the most of it is SUBJECTIVELY calculated.

Indeed if you read correctly, I did add that one could use both tA and maths together.

And I have stated what my approach , please re-read.

Sorry to bother you, I'm sure you're busy. So am I.
 

dbphoenix

Well-known member
Aug 24, 2003
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#25
What do people mean by removing price from the chart - you mean taking it off the y axis ?
That's a beginning. One can then better see that the basis of technical analysis is trader behavior and where and when and how they are trading. One can use numbers and math and calculations if he pleases, but that is an additional layer to the analysis, not the basis of the analysis itself.

Look at your charts without any lines of any kind, including price lines and time intervals. You should be able to see waves of buying and selling without interference.

These posts may be of interest to you:

http://www.trade2win.com/boards/trading-journals/217842-trading-price.html#post2796154

http://www.trade2win.com/boards/trading-journals/217842-trading-price-2.html#post2797626
 
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wallstreetwarrior87

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Oct 14, 2009
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#26
What do people mean by removing price from the chart - you mean taking it off the y axis ?
Yes, I am (personally), then you are left only with movement and time, then TA becomes about price movement.

What has happened over the years is that individuals have tried to devise/develop an indicator by reverse engineering numerical data to represent something of value, (whatever it may be).

Thus real TA has been lost, until the user of the information decides to re-define it, and unlocks the nuts and bolts of what is really being represented.
 
Aug 6, 2017
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#27
Remember I am concerned only with OBJECTIVITY not what works or not - that is an individual choice.

I not sure how removing the price is objective since it is not a calculation and waves and lines are still products of numbers.

Charts are charts and to make sense they must have a y and x axis, without the dependent axis (y) then the independent axis (x) is redundant which makes no sense. May as well dump the chart altogether.

As said , you could use both, there's no law against that.
 
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dbphoenix

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Aug 24, 2003
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#29
Remember I am concerned only with OBJECTIVITY not what works or not - that is an individual choice.

I not sure how removing the price is objective since it is not a calculation and waves and lines are still products of numbers.

Charts are charts and to make sense they must have a y and x axis, without the dependent axis (y) then the independent axis (y) is redundant which makes no sense. May as well dump the chart altogether.

As said , you could use both, there's no law against that.
Waves are the product of -- the result of -- trades. They are objective because the peak of the wave, e.g., yesterday's high, is not the result of what anyone feels about it but of the highest trade made yesterday. Anyone who cares to look it up can determine what the high was and it will be agreed upon by everyone who is aware of it. It doesn't require "settings", nor in fact does it even require a chart.

You are correct that price is not a calculation; it is the result of a completed -- a mutually agreed-upon -- trade.

As for dumping charts, many people do, such as those who trade the ladder. Charts are merely another form of graphic display.
 
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#30
Waves are the product of -- the result of -- trades. They are objective because the peak of the wave, e.g., yesterday's high, is not the result of what anyone feels about it but of the highest trade made yesterday. Anyone who cares to look it up can determine what the high was and it will be agreed upon by everyone who is aware of it. It doesn't require "settings", nor in fact does it even require a chart.

You are correct that price is not a calculation; it is the result of a completed -- a mutually agreed-upon -- trade.

As for dumping charts, many people do, such as those who trade the ladder. Charts are merely another form of graphic display.
I think this is semantical, essentially we are saying same thing but you are confusing cause and effect.

As far as the maths basis of charts go , which is what I am mainly concerned about. Every chart must have a y and an x axis, the dependent axis (y) depends on the independent axis (x).

So every future point in time will have a corresponding price sometime in future, even when there are temporary price gaps.

In maths this is the dependent variable price (y) depending on the independent (x) time, and this is the law when it comes to charts, and it is totally objective. Therefore price IS a calculation by time, every price is calculated by what time it is . These are the effects.

So Whaever the cause behind the production of price , eg) what people agree upon or feel about an irrelevant issue but is may be what traders need to solve to be profitable.

Repeating once again - This is a discussion purely about the objective CALCULATION of TA. Removing the y axis would seem to further the subjectivity of the chart, indeed half a chart and this to me is UNOBJECTIVE and I would be very sceptical of that.
 
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