Wall Street = Casino. Minus Sum Game.

[zupcon]

Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?

I'm sure thats exactly the sort of riduculous claim that Robert Pretcher might actually make. The majority contributing to this thead really do need to read some Nicholas Taleb

 

[dimsdaletraders]

Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?

Well certainly not implied by me. My post was in direct response to the remark in the post I quoted. I've no idea if Max did it with a combination of Elliot waves and entrails...just that he did it. Further comment would have to be from him.

regards
Tess

 

[Splitlink]

You are completely wrong, and I could, if I wished, show solid evidence to prove that is the case.

Even the simplest of technical indicators can provide an edge, even used mechanically and without discretion. I can derive a tradable edge from practically ANY common indicator, or TA concept.

before anyone asks, no, I'm not sharing anything with anyone

No. neither am I ! But I would put to you that whatever it is that you see is a product of your own interpretation of what there is to see. After all, we are all looking at the same thing.

 

[zupcon]

No. neither am I ! But I would put to you that whatever it is that you see is a product of your own interpretation of what there is to see. After all, we are all looking at the same thing.

Part of my trading methodology, involves taking completely random trading decisions. These crazy trades result in a distribution of gains and losses. In addition, I also take trades based on technical and statistical analysis, and these trades also result in a distribution of gains and losses.

If you compare the distributions from both approaches, they are different, and the difference is statistically significant. The difference are not imaginary, and the statistics suggest that they are not due to random chance. The difference between the means are statistically significant, and the shape of the distributions in returns are completely different.

Experience shows me that I can profit by trading with my TA signal, but more importantly I can equally well make a loss by trading against that signal. A key part of the ongoing development of my strategy is to continually demo trade fading the TA signal.

You might argue that gains may be due to good luck (its an argument that I've made), but the probability of simultaneously incurring losses from fading TA signals on other instruments and timeframes, on the basis of chance, surely has to be quite astranomical (although I concede its possible).

I would therefore argue that there is no imagination involved. I have a bunch of equity curves with positive gradients based on TA, and a bunch of equity cures with negative gradients based on trading against the TA, but the evidence for TA is actually much stronger.

The TA that I use, in common with most of the stuff out there has adjustable parameters. Some weeks parameter X may provide the optimum results, the week after parameter Y, and the week after parameter T etc. The returns between the best and worst can typically differ by a factor of 2. For the last 3 years, I've been banging my head against the problem of determining methods for self optimisation of these parameters.

Until this particular problem is solved, I'm forced to trade a larger number of small diversified positions and to take the rough with the smooth.

You are not going to like this one little bit, but if parameter X results in the best result over a given time period, then fading parameter X in the majority of cases results in the worst results over the same period. I'd argue thats quite compelling evidence.

Before anyone says, well of course, the opposite to a winning system will be a losing system, I need to make things clear. If I get a signal to buy EURUSD, the systems that are fading the TA signals do not necessarily take a sell trade, it happens on occassions, but its actually quite rare. They are totally independant systems that are running out of phase, they may already be in another trade, or they may be in a dormant state as they are programmed to randomly activate and deactivate throughout the day.

The other issue is that all of the elements of my systems contribute to my edge, so even in the case where you fade a TA signal, the other system components tend to compensate, and the system performs better than might be expected.

However, If I strip systems down to their most basic elements, the equity curves from the TA signal, v fading the TA signal are practically mirror images, one goes up, the other goes down.

I've been trading this method since 2005, I have tens of thousands of trades, and more statistics than you can shake a stick at. I use some pretty clever proprietry indicators, but only because I spent a great deal of time and money devloping them, to be brutally honest I can get similar (if not better) results from practically any indicator that I've tried. If you think about it, that really shouldnt come as a surpise.

I've had arguments with the "all is known in advance crowd", Mr Socco, Starspacer, Mr Marcus etc. I've argued that its possible that there is no cause and effect, and that a profitable traders results could be due to luck, and intellectually, I understand that allthough very improbable, it is a possibility. It was entirely due to these issues that I took a far more statistically rigorous approach to my trading.

There's loads of evidence I could present, I'm only scratching the surface as most of what I do is proprietry. Its one of those things you cant prove or disprove without revealling full details of the methodology, but anyone whose done a bit of basic research into system design, probably knows enough to realise that TA can provide a mechanical edge.

Everyone goes wrong by assumming TA is predictive and it isnt.

 

[Prawnsandwich]

Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?


Paul

What if the markets were already at a top just before the speech......

http://tradermike.net/2010/01/january_20_2010_stock_market_recap

 

[Prawnsandwich]

Originally Posted by Splitlink

Edges are the product of one's own interpretation of the Law of Probabilities. TA provides no edge, it only presents the positions of price closings, openings, highs and lows.

Of course it provides an edge isnt that the whole point of it ?

the trader always interprets that information however he is inclined and we are all different..

Not sure how to read this .....if price is a strong uptrend and retraces to a moving average from which it has bounced on a number of occasions previously, surely this is a commonly recognised signal, which is not open to interpretation differently by all traders....surely the point is that the more commonly recognised a signal from TA is the more effective it is..... hence support / resistance etc...its real and it works and is commonly recognised....

That is why I believe that constant repetition of a proven pattern is what a trader must learn and, if he is right enough times out of ten, then he has an edge.

Without that, TA is as helpful as a candle in a gale.

Sure isnt that just what TA is - constant repetition of proven pattern to get an edge ????

Dont know why I get sucked into these discussions ....

 

[Splitlink]

Part of my trading methodology, involves taking completely random trading decisions. These crazy trades result in a distribution of gains and losses. In addition, I also take trades based on technical and statistical analysis, and these trades also result in a distribution of gains and losses.

If you compare the distributions from both approaches, they are different, and the difference is statistically significant. The difference are not imaginary, and the statistics suggest that they are not due to random chance. The difference between the means are statistically significant, and the shape of the distributions in returns are completely different.

Experience shows me that I can profit by trading with my TA signal, but more importantly I can equally well make a loss by trading against that signal. A key part of the ongoing development of my strategy is to continually demo trade fading the TA signal.

You might argue that gains may be due to good luck (its an argument that I've made), but the probability of simultaneously incurring losses from fading TA signals on other instruments and timeframes, on the basis of chance, surely has to be quite astranomical (although I concede its possible).

I would therefore argue that there is no imagination involved. I have a bunch of equity curves with positive gradients based on TA, and a bunch of equity cures with negative gradients based on trading against the TA, but the evidence for TA is actually much stronger.

The TA that I use, in common with most of the stuff out there has adjustable parameters. Some weeks parameter X may provide the optimum results, the week after parameter Y, and the week after parameter T etc. The returns between the best and worst can typically differ by a factor of 2. For the last 3 years, I've been banging my head against the problem of determining methods for self optimisation of these parameters.

Until this particular problem is solved, I'm forced to trade a larger number of small diversified positions and to take the rough with the smooth.

You are not going to like this one little bit, but if parameter X results in the best result over a given time period, then fading parameter X in the majority of cases results in the worst results over the same period. I'd argue thats quite compelling evidence.

Before anyone says, well of course, the opposite to a winning system will be a losing system, I need to make things clear. If I get a signal to buy EURUSD, the systems that are fading the TA signals do not necessarily take a sell trade, it happens on occassions, but its actually quite rare. They are totally independant systems that are running out of phase, they may already be in another trade, or they may be in a dormant state as they are programmed to randomly activate and deactivate throughout the day.

The other issue is that all of the elements of my systems contribute to my edge, so even in the case where you fade a TA signal, the other system components tend to compensate, and the system performs better than might be expected.

However, If I strip systems down to their most basic elements, the equity curves from the TA signal, v fading the TA signal are practically mirror images, one goes up, the other goes down.

I've been trading this method since 2005, I have tens of thousands of trades, and more statistics than you can shake a stick at. I use some pretty clever proprietry indicators, but only because I spent a great deal of time and money devloping them, to be brutally honest I can get similar (if not better) results from practically any indicator that I've tried. If you think about it, that really shouldnt come as a surpise.

I've had arguments with the "all is known in advance crowd", Mr Socco, Starspacer, Mr Marcus etc. I've argued that its possible that there is no cause and effect, and that a profitable traders results could be due to luck, and intellectually, I understand that allthough very improbable, it is a possibility. It was entirely due to these issues that I took a far more statistically rigorous approach to my trading.

There's loads of evidence I could present, I'm only scratching the surface as most of what I do is proprietry. Its one of those things you cant prove or disprove without revealling full details of the methodology, but anyone whose done a bit of basic research into system design, probably knows enough to realise that TA can provide a mechanical edge.

Everyone goes wrong by assumming TA is predictive and it isnt.

Not all of us go wrong. Many of us are trend followers and that is predictive, once started. At least, I think so. However, we are all looking at the same chart but we all interpret it differently.

You say that you do not want to show us your system. Well done, and I agree with you but, if you did I would wager that many of the other posters, me included, would fail to use it as you do and, therefore, would lose money simply because we cannot see and act upon it, as you do. The correct way to trade it is your edge

 

[ccclarette658]

Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?
Paul

Your assumption is incorrect I am sorry to have to tell you. Correlation does not imply causation. The markets would have fallen irrespective of any "Presidential Speech".

For those tuned to the intent it is obvious in advance of the event. The correct time to sell the American markets was just after 09:00 EST last Thursday. As far as I am aware this is in advance of any speech making and other theatrics. The weakness was confirmed on Friday January 8 and Monday January 11.

You cannot complain I do not tell you everything. :cheesy:

 

[DionysusToast]

Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?


Paul

No - it's a coincidence.

 

[DionysusToast]

However, the main point of your arguments on this forum, which appear to be ever increasing in number, is that TA wont work without incorporating Fundamental Analysis is absolutely wrong, and your continued refusal to accept that there are many people making lost of money from TA trading is getting more and more irritating despite the evidence in front of you.....I would respectfully suggest that you undertake more research......

Actually - I agree with people making 'lost' of money from TA. That's the problem.

There are thousands of pieces of information that can be used to make a trading decision. I put them into 2 categories. Technical Analysis and 'Everything else'. The everthing else, I also call 'Fundamental Analysis'. A company coming to the end of it's lock-up period is part of fundamental analysis but has nothing to do with price-earnings, price-book, debt to equity etc. It is simply a moment in the life-cycle of the company where things change.

As far as tehnical analysis goes - there are 3 parameters that are generaly used and thousands of ways that these pieces of information are manipulated. Still - it's the same data.

- Volume
- Time
- Price

As far as 'everything else' is concerned we have
- market participant information
- scheduled announcement information
- insider activity information
- news
- company financial information
- company life-cycle information
- product release/approval/patent expiration
- industry information
- economic information (employment, inflation, interest rates, inventories, retail sales etc)
- index re-balancing

The list goes on & on (and to be honest, so do I).

Now - in a previous post,you stated that to use fundamentals you would have to effectively know everything about a company. This is very far from the truth. Depending on what you trade, you need to know different things.

Your state I 'categorise' information incorrectly. I see that as a compliment. My argument is there is no need to categorise information as all information is pertinent to making a decision regardless of which camp it falls into.

I would further add, that once you take a dogmatic approach and fit yourself into one of the camps and then defend it's pure use in denial of all other information, you have sealed your fate.

People do pure TA because it appears to offer a short cut. Then the short cut becomes a long route to nowhere.

 

[DionysusToast]

One interesting point.

TA purists say that everything is built into price.
They will then say that of course you stand aside during earnings & economic announcements.
But apart from that - everthing is built into price.

So - even though technicians will admit that non-technical information is needed in the case of earnings/announcements, they refuse to believe that other non-technical information could be as much or even more useful.

Should we really expect to be rewarded by the market for taking big risk or should we expect to be rewarded for doing our homework ?

 

[ccclarette658]

For those tuned to the intent it is obvious in advance of the event.

Now has the chosen one to whom yesterday I imparted today's news not seen it verified today in real time, unfolding as anticipated all morning?

No public posting please.
If you wish to discuss do so by PM.

Hope you like it.

 

[Trader333]

The markets would have fallen irrespective of any "Presidential Speech".

How do you know ?


Paul

 

[Mr. Charts]

Actually - I agree with people making 'lost' of money from TA. That's the problem.

There are thousands of pieces of information that can be used to make a trading decision. I put them into 2 categories. Technical Analysis and 'Everything else'. The everthing else, I also call 'Fundamental Analysis'. A company coming to the end of it's lock-up period is part of fundamental analysis but has nothing to do with price-earnings, price-book, debt to equity etc. It is simply a moment in the life-cycle of the company where things change.

As far as tehnical analysis goes - there are 3 parameters that are generaly used and thousands of ways that these pieces of information are manipulated. Still - it's the same data.

- Volume
- Time
- Price

As far as 'everything else' is concerned we have
- market participant information
- scheduled announcement information
- insider activity information
- news
- company financial information
- company life-cycle information
- product release/approval/patent expiration
- industry information
- economic information (employment, inflation, interest rates, inventories, retail sales etc)
- index re-balancing

The list goes on & on (and to be honest, so do I).

Now - in a previous post,you stated that to use fundamentals you would have to effectively know everything about a company. This is very far from the truth. Depending on what you trade, you need to know different things.

Your state I 'categorise' information incorrectly. I see that as a compliment. My argument is there is no need to categorise information as all information is pertinent to making a decision regardless of which camp it falls into.

I would further add, that once you take a dogmatic approach and fit yourself into one of the camps and then defend it's pure use in denial of all other information, you have sealed your fate.

People do pure TA because it appears to offer a short cut. Then the short cut becomes a long route to nowhere.

Cracking good post DT !
You've clearly been around these boards for quite a while in some other incarnation but I'm struggling to think who you might be.
Anyway, your presence is certainly uplifting the quality of t2w.
Richard

 

[ccclarette658]

How do you know ?


Paul

Everything is known in advance as everything is decided in advance.

I have some free time this morning as business was completed early owing to the conditions in force.

If you look closely at the American markets around the dates I mention in my post above you will see weakness. Put your attention on the charts until you see why the market is weak and this point and needs a correction. The markets corrected for a reason. News wasn't the reason. The difficulty people have in coming to terms with this is that it totally contradicts what the majority have been mis-educated to believe. If you put your attention on it very closely you may perceive that clever traders had already sold their long positions and were actually net short before the President spoke. When you are long you sell into rising prices.

It is far easier to look for an "external" reason to explain a piece of price action than it is to challenge yourself to find the explanation in the market behaviour. Hence the proliferation of news followers, signal services, etc. It also plays into the mindset of traders who avoid admitting to having made errors of judgment - the trade was right, it is that Big Bad President talking down the markets...

Unpredictable = not my fault for getting it wrong BUT
Unpredictable = I am gambling as I have no way of predicting when I will be right

The same faculties which allowed me to perceive the imminent drop in the US markets were used to correctly forecast the price action in the March FTSE Future yesterday evening. One member (who has always behaved properly, nudge) was given this information before the market opened today.

The collective membership here have had this demonstrated to them repeatedly in the past by two highly skilled traders. These demonstrations exist in the archives for those interested. Unfortunately the membership demonstrated by their collective conduct that they are not worthy to be shown anything of merit. Sadly this means that in the future the decent, polite, respectful, and open minded aspirants are denied the benefits.

None of this is nonsense. Those who open their minds and challenge themselves to aspire will benefit. Those who deny it is possible betray the limitations of their own ambition. It is sad when any individual abandons the quest to reach their full potential in favour of what they have been told they may achieve. What is criminal is when such people corrupt others by imposing their own intellectual and moral limitations, to the effect that newbies are denied the right to aspire.

I hope and expect this clarifies.

 

[DionysusToast]

Cracking good post DT !
You've clearly been around these boards for quite a while in some other incarnation but I'm struggling to think who you might be.
Anyway, your presence is certainly uplifting the quality of t2w.
Richard

Glad you like it - I learnt a lot of it from you !

You could look at it 2 ways Richard...

1 - A pheonix rising gloriously once again from the flames.
2 - That dirty 1 pence piece you keep trying to palm off on the local newsagent but always get back in your change.

I'm comfortable with either description !

 

[montmorencyt2w]

In the first instance I'm not sure that 90% of traders use TA..where did that figure come from ?....

My specific use of it came from Gary Norden's book, already referred to, but it's one of those numbers you see from time to time, not quite as frequently as the number traders who lose. (Well, 90, 95, whatever....).
[/quote]

Im sure many are looking at fundamentals, eg earnings and many are probably not using any proper system apart from what they hear / see on Motley fool, yahoo finance CNBC etc...or are just gambling

Traders that use TA and are failing are not using it correctly..or or are not exercising money managment or probably just dont understand what it is...as as evident from this thread..

[/quote]
Yes, criticism of traders is something that Gary Nordern picks up on. People find TA doesn't work for them, but they are told that it does work, so obviously it's they who are at fault, or their psychology is all wrong - they need to be in "the zone".

It can really be very simple....the price of a stock may be going up over a period without there being any obvious news or fundamental information in the public domain and you can use TA to work this out ...How ? By looking at a chart and seeing the price going up...

And which bit of TA is going to tell you it's about to reverse, and/or whether that reversal is a minor turnaround, or a major reverse? I know some tricks that are supposed to tell you, but how many times do they actually work out in practice?
That's the area that Gary Nordern talks about and he quotes the statistics for some of them.

 

[montmorencyt2w]

Ah jaysus your missing the point here...

You dont have to look very far for examples of very effective TA.....this site - Trader Dante, Claudia, Mr Charts and others I'm sure...very simple but effective methods...so to say that TA without discretion / FA has never been proven is a nonsense ..of course there is often an element of discretion within a method, but this discretion is based on the chart / TA / method, and does not take into account FA....

Tom has said on many occasions that there is a fair amount of discretion involved in his own trading. This is why a newbie cannot just take what he perceives to be Tom's style of trading and make it work the same. I have become convinced that Tom and people who like him appear to trade an essentially technical method are using far more than TA in their own trading, essentially by virtue of their long experience and their knowledge of how the markets work together.

Oh yeah not to forget my own personal experience....so is that proof enough for you ?

With all due respect, you have ~50 posts and you haven't put a Bio in your profile, and I don't know your trading history.

 

[DionysusToast]

Everything is known in advance as everything is decided in advance.

.....

I hope and expect this clarifies.

Well. To be honest, it doesn't - but I've only read through it 5 times and I always sleep on anything that may require scratching under the surface.

I have looked at the dates you mentioned but without knowing what you are looking at. Nothing there jumps out at me. There are sell offs that occured on the dates you mentioned & on other dates too. On the 21st, just before 9am, again I don't see anything that ( without the benefit of the right hand side of the chart) would see me going short.

Of course - you have to be open to new ideas and so I can't dismiss what you are saying but neither can I see it.

If I were your neighbour, I'd consider popping round and asking if I could borrow a grail of sugar...

 

[DionysusToast]

I have become convinced that Tom and people who like him appear to trade an essentially technical method are using far more than TA in their own trading, essentially by virtue of their long experience and their knowledge of how the markets work together.

That would be my take on it too.