Is Technical Analysis a farce

[Smart_trade]

Anurag,

I respect your views on TA. Whether they are right or wrong, I will leave that to you. It is just like convincing someone whether "God" exists or not. Some would say he exists as miracles have happened, others would argue sighting the scientific evidence that God is a mere creation of a man himself.

Anyway, for someone to make money in the market, neither FA is important nor TA. The only thing that matters is "Edge". Now, how one gets that edge is a different story altogether. I have seen Statisticians become excellent traders and have also seen some CMT's being excellent traders. It is one of those questions which is very difficult to answer and very difficult to judge. Rest assured, there's one thing I can say, those who make money from the markets, never ever reveal how they do it. No book, no seminar contains the actual strategy to do it. This my friend is the reality of trading industry. And when people raise doubts about TA or FA, these smart traders, simply sit back and smile.

Tc

Hello Raunak,

While I do agree with most of your observations, I beg to differ from "Rest assured, there's one thing I can say, those who make money from the markets, never ever reveal how they do it. No book, no seminar contains the actual strategy to do it. This my friend is the reality of trading industry. And when people raise doubts about TA or FA, these smart traders, simply sit back and smile." There are forums where seniors not only reveal the complete strategies they trade but also post model trades everyday, post excel sheets of how much made in the month, also post some trades in live markets. These forums are run by traders who trade for living and do not have other hidden motives like giving seminars,paid newsletters, tips etc. And they do a really advanced and highly profitable trading.

There were some great traders here in our forum....they posted some very useful stuff but this being a unrestricted public forum, many people with different interests (some holy and some unholy ) comment on the methods with sole aim to criticise and make any progress difficult . The person who tries to post his methods starts getting a feeling that he is doing a thankless job and he finally gives up in utter disgust.

TA is not something which alone will make great traders...but there are many good traders who trade on TA...it gives you a definite edge by way of trading in the direction of longer timeframe trends, adding in profitable positions, strict chart based stoploss etc. TA is a decision support system which gives you an entry, stoploss, add points and exit from a trade. Other things like position sizing, risk control,traders psychology,adequate capitalisation,backtesting of the method in various data samples etc all play a big role in making of a successful trader.

Hope the above gives some realistic view of trading to aspiring traders and they cut their learning curve to some extent.

Best wishes,

Smart_trade

 

[SwingKing]

do not have other hidden motives like giving seminars,paid newsletters, tips etc. And they do a really advanced and highly profitable trading.

ST,

My comment was reserved for the above mentioned experts. Forum participants were certainly not in my mind when I wrote what I wrote. I belong to the same community which you referred to and hence I understand what you were referring to.

Tc

 

[Apurv7164]

Aha... It is very stupid to chime in between 2 senior people discussing and those 2 people who has helped me a lot in learning... but this is the reason I got tempted to chime in between...

@ Smart_Trade - I m not sure if you remember me but I have learnt TD methodologies from you...

@ to continue general discussion -
Again coming back to the the discussion - I would agree to the statement of Raunakji "Rest assured, there's one thing I can say, those who make money from the markets, never ever reveal how they do it. No book, no seminar contains the actual strategy to do it. This my friend is the reality of trading industry. And when people raise doubts about TA or FA, these smart traders, simply sit back and smile"

Smart_Trade - you are considered as TD expert in this forum - can I ask you something? When Thomas DeMark revealed his methodlogies? If my knowledge is correct, mostly after 20 years. He kept on using these methods for 20 long years and then he thot of earning extra bucks with publishing them.... I really doubt if Thomas Demark or any of his associates would be using methods published in books for their trades... they must have invented something else and might be trading with those new methods...

On a similar note, why Dr charles cud wr0te book on ADX with new ways of interpreting them? or John Hayden or Andrew Cardwell wrote books on how to use RSI? Why did Mr. Wilder who is originated never wrote this methods of interpretation? Do we think Mr. Wilder did not know/understand this way of interpretation? I m sure he wud know and he wud b trading this way but he published lil part of entire big ocean....

Now we cannot compare people guiding in forum with these book writers coz people in forum and guiding others r normal people and who have urge of helping others...

No offense just my opinion that actual methods,systems, interpretation comes in market when they are not sooooo effective and mostly trader stick to those interpretation and fails in trading... Rather if they start looking at those indicators or methods with unique way or start research and experiment, they wud surely get success... apart from that today everybody wants to earn quick and easy bucks... Trading is the business wherein utmost hardwork and knowledge is required... this simple fact people dont understand and fail...

Today successful engineers, doctors, lawyers, CAs, MBAs all keep on reading/studying/learning new things to keep themselves updated and if i know correctly they spend more than 20 hours a week (apart from regular work) in reading and learning new things.... how many traders spend or give this much efforts in reading and learning things? How many traders have read same book more than 2 times? I think we need to read more than 2 times to understand any concept or theory and that is what we do or did with other profession...

Again no offense towards anybody's opinion but just my 2 cents...

Bests,
Apurv

 

[Apurv7164]

thnx savant for the time & effort u put in. u have a valid point.
but it is a little difficult 2 shake my beliefs. the few good traders that I have seen in a span of 15 yrs,do not know the T of technical analysis, whereas i have come across numerous analysts, who after burning their own fingers, start looking for people who can give them accounts to trade or buy their tips in some manner. as a matter of fact I also chanced upon a book titalled
'If they are so good why aren't you so rich'.
anyways i dont have a closed mind, the day I meet a succesful technical analyst trading for his own account, it'll definitely change my perception.

Anurag,

What is Technical Analysis? is it drawing trendline? is it trading with RSI? is it trading with any other indicator?

One of my uncle does not know TA but he is successful as trader and he always tells me the same that I do not know ur TA and chart and computer and etc but still I earn significantly more than you... Here I always have disagreement with him.... I tell him uncle, I agree u dont know all these fency stuffs but still you r doing technical analysis... he had got his own methods and observations.. i consider that as technical analysis...

To me analysing something from its internal technical way is technical analysis.. If accountants are talking about some heavy stuff of balance sheet, it is technical for me.. i say it is technicals of accounts... same way technicals of software, technicals of medicine and technicals of trading....

Bests,
Apurv

 

[anuragmunjal]

Aha... It is very stupid to chime in between 2 senior people discussing and those 2 people who has helped me a lot in learning... but this is the reason I got tempted to chime in between...

@ Smart_Trade - I m not sure if you remember me but I have learnt TD methodologies from you...

@ to continue general discussion -
Again coming back to the the discussion - I would agree to the statement of Raunakji "Rest assured, there's one thing I can say, those who make money from the markets, never ever reveal how they do it. No book, no seminar contains the actual strategy to do it. This my friend is the reality of trading industry. And when people raise doubts about TA or FA, these smart traders, simply sit back and smile"

Smart_Trade - you are considered as TD expert in this forum - can I ask you something? When Thomas DeMark revealed his methodlogies? If my knowledge is correct, mostly after 20 years. He kept on using these methods for 20 long years and then he thot of earning extra bucks with publishing them.... I really doubt if Thomas Demark or any of his associates would be using methods published in books for their trades... they must have invented something else and might be trading with those new methods...

On a similar note, why Dr charles cud wr0te book on ADX with new ways of interpreting them? or John Hayden or Andrew Cardwell wrote books on how to use RSI? Why did Mr. Wilder who is originated never wrote this methods of interpretation? Do we think Mr. Wilder did not know/understand this way of interpretation? I m sure he wud know and he wud b trading this way but he published lil part of entire big ocean....

Now we cannot compare people guiding in forum with these book writers coz people in forum and guiding others r normal people and who have urge of helping others...

No offense just my opinion that actual methods,systems, interpretation comes in market when they are not sooooo effective and mostly trader stick to those interpretation and fails in trading... Rather if they start looking at those indicators or methods with unique way or start research and experiment, they wud surely get success... apart from that today everybody wants to earn quick and easy bucks... Trading is the business wherein utmost hardwork and knowledge is required... this simple fact people dont understand and fail...

Today successful engineers, doctors, lawyers, CAs, MBAs all keep on reading/studying/learning new things to keep themselves updated and if i know correctly they spend more than 20 hours a week (apart from regular work) in reading and learning new things.... how many traders spend or give this much efforts in reading and learning things? How many traders have read same book more than 2 times? I think we need to read more than 2 times to understand any concept or theory and that is what we do or did with other profession...

Again no offense towards anybody's opinion but just my 2 cents...

Bests,
Apurv

Hi Apurv

To a great extent I agree with u and Raunaq that people who are really successful do not part with their trading systems. Thomas Demark may have revealed his system after working for 20 yrs. on it, it is very much possible that by the time he revealed his systems, they would have stopped performing in the real mkt. (I believe that mkts. are dynamic and what works today may not work tomorrow).
but I have a different way of looking at this. once he published the book, the reader got an insight into the thought process of a great trader and that itself is a big plus. when I browse through this forum or read a book, I am not looking for a specific system on which I can trade but my endeavour is to gain an insight into the thought process of a good trader.maybe after understanding that thought process and combining it with whatever experience I have I can build somthing that works for me......

regards

Anurag

 

[Apurv7164]

Anurag,

I dont mean to be offensive or critic but I wud like to ask you certain questions...

How many indicators or tools u use for trading?
Do u consider urself master/expert of at least one of them?
Is there any indicator or tool, you have read every single available material published on the planet earth?
Have you read any particular TA book more than once like we used to read and refer chapters again and again during our school or college days?
U remember? we used to talk during our school or college days like "arey yaar kitani baar science complete kiya tune?" or "is baar toh meri lagane vaali hai 2 hi baar science kar paya hu... bhagwan 60 marks dila dena to mera average maintained rahega..." or "How many examples/equations/problems you practiced for Algebra?"... have you ever tried and apply this in learning TA or trading?

Bests,
Apurv

 

[anuragmunjal]

Anurag,

I dont mean to be offensive or critic but I wud like to ask you certain questions...

How many indicators or tools u use for trading?
Do u consider urself master/expert of at least one of them?
Is there any indicator or tool, you have read every single available material publushed on the planet earth?
Have you read any particular TA book more than once like we used to read and refer chapters again and again during our school or college days?
U remember? we used to talk during our school or college day like "arey yaar kitani baar science complete kiya tune?" or "How many examples/equations/problems you practiced for Algebra?"... have you every tried and apply this in learning TA or trading?


hi Apurv

I have read a few books on TA and I admit that I have not done an extensive research in any particular indicator, but there is a reason for this. my mind tells me that logically all indicators follow price. I read a few posts of yours and saw a very interesting and innovative way in which u look at ADX.
I gained an insight into your 'thought process' and it was very enlightening.

but the way I think is when I see ADX as an indicator,
what does it tell me...that the price has been trending or not....
do I need an indicator to tell me this..... no
now if I see a high ADX reading it tells me that price has been trending till this point in time.
can it tell me that the price will trend tomorrow.... no
I " assume " that since it has been trending it will continue to trend in future.
whatever little knowledge I have of indicators, I have seen that they definitely give me a very good picture of what has happened in the past, but in trying to gauge what will happen in future, I have to make "assumptions".
if making "assumptions" is the way to trade then I may as well make my "assumptions" based on price and price alone.

regards

Anurag

 

[Apurv7164]

that is fine Anurag... go ahead with the chart only... u dont need to have any other weapon but make sure u learn and understand and are aware of every corner of the method or style....

Trust me as a mentioned in my that post, ADX is not something extra ordinary... it is just coincidently i got into using it and I expanded my learning... as simple as that...

Pick up one or two thing, make good friendship with them, learn them, understand them, take them in your confidence and I assure you market or chart or indicator will start talking to you... it is same as dealing with people.. if you want xyz person to share everything with u or tell u, u need to be good friends with him, u need to understand him (without having any selfish moto), you need to take him in confidence, build a raport etc...

Sorry I missed ur second point so here I m editing this post of mine....

I assume/guess is big word friend... here we r trying to make educated or learned assumption or guess. Sorry Raunakji I m using ur statement frequently these days... I m ready to pay royalty if you have patented it or I m gonna get trade mark on it... lolzzzz... coming back to serious point, if i m owner of garment shop and made total business of 25k today, do I have assurity I m gonna have total turnover of 25k or more tomorrow? Answer is NO but still tomorrow morning 9 o'clock I m gonna reach to my showroom and open it with the assumption that I will have some business today..... uncertainty is unavoidable part of any business.. you gotta accept it...

 

[anuragmunjal]

Sorry I missed ur second point so here I m editing this post of mine....

I assume/guess is big word friend... here we r trying to make educated or learned assumption or guess. Sorry Raunakji I m using ur statement frequently these days... I m ready to pay royalty if you have patented it or I m gonna get trade mark on it... lolzzzz... coming back to serious point, if i m owner of garment shop and made total business of 25k today, do I have assurity I m gonna have total turnover of 25k or more tomorrow? Answer is NO but still tomorrow morning 9 o'clock I m gonna reach to my showroom and open it with the assumption that I will have some business today..... uncertainty is unavoidable part of any business.. you gotta accept it...

hi Apurv

I agree that uncertainity is an unavoidable part of any business, more so of the particular business that we are in.
my whole point was that an indicator does not provide me any extra edge to guage the future price movement or to overcome that uncertainity. it just gives me a nice picture of what has happened upto this point in time and that picture I can get just by just looking at the price.


regards

 

[Smart_trade]

1) Comparison with Thomas Demark is incorrect as Thomas DeMark is in the business of trading advisory and obviously he will not reveal his latest research to public. We are talking about successful traders who are NOT in the business of trading advisory, newsletters, seminars,tips,managing others trading accounts etc.

2) I am no expert in TD methods....these methods are in public domain and I am sure many will be more proficient in these methods. So no claim made whatsoever......though I have traded TD methods and gained a lot by the way TD thinks. I trade totally different methods now as I find these better and more profitable.....

3) There are very good traders who donot use TA ....but also there are very good traders who trade entirely on TA based methods, they are successful and they are also rich.The day you come across them, you too will change your opinion.

4) Everybody speaks based on his experience. I have been fortunate to come in contact with 2 great traders, both TA based, successful and they gave me everything they knew ( the exact methods which they traded). Both these gentlemen had totally different methodologies.....so I had put my views...others may have different experience and that is the reason they have their views.When great traders teach, they expect the students to put in lot of efforts...nothing is given readymade, just put the values and start making money type. Teaching real trading on real methods in realtime is being done even now in a few forums....find out yourself. Dont PM me...I will not give any clue even indirectly as I am strongly against such practices....

5) Apart from trading method,there are many other factors which are essential for trading success...I had spoken about them in my original post.

From my side I am ending this debate saying that everyone is entitled to his views and I respect others views.

Smart_trade