Is technical analysis all smoke and mirrors?

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nisiprius
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Re: Is technical analysis all smoke and mirrors?

Post by nisiprius » Thu Mar 29, 2018 10:14 am

jalbert wrote:
Wed Mar 28, 2018 1:27 am
Sequences of coin tosses also exhibit “momentum”.
As Wikipedia says, "citation needed." What's your source for this? Oh, wait, probably found it:

Dynamical Bias in the Coin Toss

OK, very interesting.
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protagonist
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Re: Is technical analysis all smoke and mirrors?

Post by protagonist » Thu Mar 29, 2018 12:29 pm

nisiprius wrote:
Thu Mar 29, 2018 10:14 am
jalbert wrote:
Wed Mar 28, 2018 1:27 am
Sequences of coin tosses also exhibit “momentum”.
As Wikipedia says, "citation needed." What's your source for this? Oh, wait, probably found it:

Dynamical Bias in the Coin Toss

OK, very interesting.
For the observant, this is actionable.
Non-mathematicians (like me) should read the abstract, and then skip down to "The Pragmatic Uncertainty Principle" (for amusement purposes). Heisenberg would roll over in his grave.
Moderator, please don't delete.
Last edited by protagonist on Thu Mar 29, 2018 12:57 pm, edited 2 times in total.

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Re: Is technical analysis all smoke and mirrors?

Post by triceratop » Thu Mar 29, 2018 12:36 pm

How could I remove a post including a link to a SIAM Review paper? I love SIAM Review! :D

edit: I also know some of the people named in the article! :O

Thanks for the link, reading now. It's highly actionable.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Is technical analysis all smoke and mirrors?

Post by FrankLUSMC » Thu Mar 29, 2018 4:44 pm

triceratop wrote:
Thu Mar 29, 2018 12:36 pm
How could I remove a post including a link to a SIAM Review paper? I love SIAM Review! :D

edit: I also know some of the people named in the article! :O

Thanks for the link, reading now. It's highly actionable.
It is in the Theory section, no actions necessary right?

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Re: Is technical analysis all smoke and mirrors?

Post by wootwoot » Thu Mar 29, 2018 8:50 pm

protagonist wrote:
Thu Mar 29, 2018 8:17 am
wootwoot wrote:
Thu Mar 29, 2018 1:13 am
Watch this documentary about Paul Tudor Jones and let me know if you think technical analysis is real or not.

https://m.youtube.com/watch?v=-38x671CUQw
It looks interesting from the beginning, but it is 55 minutes long and I am hungry. Can you please indulge me and summarize?
Here is the short version:

https://en.m.wikipedia.org/wiki/Paul_Tudor_Jones

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Re: Is technical analysis all smoke and mirrors?

Post by fortyofforty » Thu Mar 29, 2018 8:51 pm

Interesting. Not actionable, but interesting nonetheless.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Re: Is technical analysis all smoke and mirrors?

Post by wootwoot » Sun Apr 01, 2018 2:58 pm

Did anyone watch the movie about Paul Tudor Jones this weekend?

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Re: Is technical analysis all smoke and mirrors?

Post by Pajamas » Sun Apr 01, 2018 3:24 pm

wootwoot wrote:
Sun Apr 01, 2018 2:58 pm
Did anyone watch the movie about Paul Tudor Jones this weekend?
You mean the 1987 documentary "Trader"?

It's on YouTube if anyone is interested, but I won't link to it directly because it probably shouldn't be there.

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protagonist
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Re: Is technical analysis all smoke and mirrors?

Post by protagonist » Tue Apr 03, 2018 7:24 pm

This article reminds me of how astronomers constantly added tweaks to the Ptolemaic system during the 1400 or so years between Ptolemy and Copernicus/Galileo when inconsistencies arose that were not accounted for by their geocentric universe. Arguably string/M-brane etc theorists are doing the same today. When you become invested deeply enough in an idea, it is so hard to admit you are just wrong. https://www.forbes.com/sites/tomaspray/ ... 05dc94578e

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Re: Is technical analysis all smoke and mirrors?

Post by OnTrack » Tue Apr 03, 2018 9:19 pm

nedsaid wrote:
Wed Mar 28, 2018 12:52 am
... I remember Louis Rukeyser and Wall $treet Week, he had a panel of technical analysts called the elves that would make bullish or bearish calls on the market. Problem was the elves were almost a perfect contrary indicator. They were bullish when they should have been bearish and bearish when they should have been bullish. ...
I recall at one point, the elves updated their formula to include other analysts' forecasts. If other analysts were bullish that would be taken as a bearish indicator and vice versa.

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Re: Is technical analysis all smoke and mirrors?

Post by wootwoot » Tue Apr 03, 2018 9:30 pm

Here's the link again: https://m.youtube.com/watch?v=-38x671CUQw Watch this documentary about Paul Tudor Jones then tell me what you think about technical analysis.

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Re: Is technical analysis all smoke and mirrors?

Post by fortyofforty » Wed Apr 04, 2018 6:17 am

OnTrack wrote:
Tue Apr 03, 2018 9:19 pm
nedsaid wrote:
Wed Mar 28, 2018 12:52 am
... I remember Louis Rukeyser and Wall $treet Week, he had a panel of technical analysts called the elves that would make bullish or bearish calls on the market. Problem was the elves were almost a perfect contrary indicator. They were bullish when they should have been bearish and bearish when they should have been bullish. ...
I recall at one point, the elves updated their formula to include other analysts' forecasts. If other analysts were bullish that would be taken as a bearish indicator and vice versa.
I think the "elves" were such an obviously contrary indicator that Rukeyser stopped featuring them. I miss that show (though not for the investing advice).
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Re: Is technical analysis all smoke and mirrors?

Post by bgf » Wed Apr 04, 2018 7:51 am

triceratop wrote:
Thu Mar 29, 2018 12:36 pm
How could I remove a post including a link to a SIAM Review paper? I love SIAM Review! :D

edit: I also know some of the people named in the article! :O

Thanks for the link, reading now. It's highly actionable.
with a probability of 0.51 you have a very slight edge. according to the Kelly criterion, if you have a bankroll of $20 you should wager $0.40 per toss.

now go out and get rich!
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: Is technical analysis all smoke and mirrors?

Post by carol-brennan » Tue Mar 19, 2019 9:05 am

Technical analysis is complete and utter BS from top to bottom.

It's the financial industry equivalent of snake oil salespeople.

It's really easy to see the con at work. On any given week on CNBC or other financial quack shows, take note of the predictions uttered by the herd of technical bloviators, justifying their gibberish with lines, patterns, and terms like "head and shoulders." The next week or two, check your notes, and see how they've done.

Smell anything stinky yet? Check your shoes first, but that's probably not the source of the miasma.

Most people never do this because they get mesmerized by the current week's BS brethren. That's part of the con.

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Re: Is technical analysis all smoke and mirrors?

Post by wootwoot » Tue Mar 19, 2019 9:13 am

carol-brennan wrote:
Tue Mar 19, 2019 9:05 am
Technical analysis is complete and utter BS from top to bottom.

It's the financial industry equivalent of snake oil salespeople.

It's really easy to see the con at work. On any given week on CNBC or other financial quack shows, take note of the predictions uttered by the herd of technical bloviators, justifying their gibberish with lines, patterns, and terms like "head and shoulders." The next week or two, check your notes, and see how they've done.

Smell anything stinky yet? Check your shoes first, but that's probably not the source of the miasma.

Most people never do this because they get mesmerized by the current week's BS brethren. That's part of the con.
I take it you didn't watch the Paul Tudor Jones documentary...

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Re: Is technical analysis all smoke and mirrors?

Post by cheezit » Tue Mar 19, 2019 9:24 am

If you really want a laugh, look up some of the TA articles put out by cryptocurrency sites in early January of 2018 and the following few months. There's a reason something like 96% of forex (and crypto) traders, who use TA extensively due to the zero expected real returns and difficulties in doing fundamentals analysis in that domain, lose money.

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Re: Is technical analysis all smoke and mirrors?

Post by dm200 » Tue Mar 19, 2019 9:57 am

A few years ago, there were a lot of investing radio shows - most seem to have gone away.

All sorts of folks giving advice (some good - some terrible), several estate planning attorneys, and so on.

One of these guys on the radio, pitching his "system" - for sale - was a Physicist. He claimed that he saw great similarities of stock market charts and charts related to physics. Made zero sense to me - but he was on the radio for several years.

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Re: Is technical analysis all smoke and mirrors?

Post by StandingRock » Tue Mar 19, 2019 9:59 am

It's like astrology. Some people find interest in it and might make life decisions based on it. But it's not proven to work really.

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Re: Is technical analysis all smoke and mirrors?

Post by pward » Tue Mar 19, 2019 9:59 am

There is a major disconnect between what technical analysis is and what people (especially on this forum) think technical analysis is. In reality technical analysis is descriptive, not predictive. It's simply analyzing the each markets/assets price, volume, and momentum movements and comparing those against other markets/assets. Sometimes in doing this you uncover clues. There are always conflicting clues, and no matter how strong the evidence, analyzing technicals is always analyzing what happened in the past, so there is no guarantee that the outcome the clues are pointing to will come true. Which is why most technical traders utilize complex risk management systems that ensure that they can be wrong on 2/3 of their trades, 3/4 of their trades, or even more than that and sill make a profit. Most trades as a technical trader are meh. Small gains or small losses. But you catch one big trade and it can make your entire year. What you see is technical traders bragging about their big wins. What you don't see is the 100+ trades that did nothing prior to that big win. But that's all it takes, one big win. So you make a lot of trades where you limit your potential loss and eventually you catch a big one. Technical traders set up systems that are defense first, offense second. Capitol preservation is always first, because they are aware that they are taking gambles and will likely be wrong more than they are right.

Source: I'm a recovered technical trader so unlike most people here I have actual real world experience with this. I stopped trading not because I didn't do well (I actually did quite well to be honest), but because the time involved just wasn't worth it. I burned out and wanted to spend my time and energy on things other than staring at charts. That being said, there may be a period of time where I take a small chunk of my portfolio (10-20%) and go down that route again. But I don't think I'll ever trade my entire portfolio ever again, I've settled on a long term AA that I like and am comfortable with. I no longer feel like I have to "protect" my money by using technical analysis because I discovered that I can use uncorrelated assets to protect my capitol in a downturn. My AA in my buy and hold portfolio is defense first and offense second just like I was as a trader, so I use the same mindset I used as a trader as a buy and hold investor. I start with looking at the maximum drawdown and time to recover, and get that inline where I want it, then I work on tweaking the offense to bring the return up to my desired threshold. I think this is opposite of most people here, who look at the offense and expected return first, then simply add in enough bonds to water it down a tad. Buy and pray does not fit my mindset. I need to be sure that I have my defenses in place.
Last edited by pward on Tue Mar 19, 2019 10:17 am, edited 1 time in total.

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Re: Is technical analysis all smoke and mirrors?

Post by carol-brennan » Tue Mar 19, 2019 10:17 am

Here's the latest bit of TA mumbo jumbo that just crossed my desk:

Dow's bullish 'golden cross' set to appear, exactly 3 months after a bearish 'death cross'
https://www.marketwatch.com/story/dows- ... 2019-03-19

The story says, "After the last golden cross, the Dow rallied 29% before the next death cross appeared."

Great! We can mark our calendars and see whether that happens.

What the article fails to mention is that the bearish "death cross" 3 months ago proved to be MUMBO JUMBO! LOL. And now we're supposed to listen to more MUMBO JUMBO?

"The death cross indicator has proven to be a reliable predictor of some of the most severe bear markets of the past century: 1929, 1938, 1974, and 2008."
https://www.investopedia.com/terms/d/deathcross.asp


LOL!!!

Man, oh, man, and this TA (and financial news reporting) passes for employment in the information age? Now I know what happened to all of those C and D students from my high school classes all those years ago. They're now professional idiots and con artists. I always wondered where they'd end up.

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Re: Is technical analysis all smoke and mirrors?

Post by DonIce » Tue Mar 19, 2019 10:28 am

pward wrote:
Tue Mar 19, 2019 9:59 am
Most trades as a technical trader are meh. Small gains or small losses. But you catch one big trade and it can make your entire year. What you see is technical traders bragging about their big wins. What you don't see is the 100+ trades that did nothing prior to that big win. But that's all it takes, one big win.
For one big win to be "all it takes" you've got to be levered like crazy, which also increases the risk that your downside protections will fail.

I haven't seen any evidence that any form of "technical analysis" provides better results than "random entry" trading methods, where your profitability depends entirely on your exit (i.e. "let your winners run but exit your losers immediately"). Such methods can generate a slightly positive expected value assuming nothing more than a random walk of the underlying price. However, any sudden shock to the market can wipe out your gains from hundreds of trades. It goes back to the cliche of picking up pennies in front of a steamroller.

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Re: Is technical analysis all smoke and mirrors?

Post by pward » Tue Mar 19, 2019 10:36 am

DonIce wrote:
Tue Mar 19, 2019 10:28 am
pward wrote:
Tue Mar 19, 2019 9:59 am
Most trades as a technical trader are meh. Small gains or small losses. But you catch one big trade and it can make your entire year. What you see is technical traders bragging about their big wins. What you don't see is the 100+ trades that did nothing prior to that big win. But that's all it takes, one big win.
For one big win to be "all it takes" you've got to be levered like crazy, which also increases the risk that your downside protections will fail.

I haven't seen any evidence that any form of "technical analysis" provides better results than "random entry" trading methods, where your profitability depends entirely on your exit (i.e. "let your winners run but exit your losers immediately"). Such methods can generate a slightly positive expected value assuming nothing more than a random walk of the underlying price. However, any sudden shock to the market can wipe out your gains from hundreds of trades. It goes back to the cliche of picking up pennies in front of a steamroller.
No you don't need to be levered like crazy. There are stocks every year that go up 5x in value.

And yes, a lot of the "magic" behind trading systems are a result of their entry and exit points, position sizing, and rules behind adding to or reducing from positions; using complex risk management strategies to cut losses fast, let winners run, and also limit turning a winner into a loser. There is some overnight risk if someone was using a system, like mine, that was holding positions for multiple days. There's no doubt that a position can open below a stop loss and lead to a greater loss than expected (or locking in a gain lower than you wanted). And sometimes those can whipsaw, where you get stopped out only to see the market reverse and go back up. That is indeed the most frustrating thing that happens in trading. But the systems are designed to account for these kinds of things. And traders also rarely trade with large size, so no a sudden "shock to the market" is not going to wipe out gains from a hundred trades. This is a silly and very false statement. As a rule my system would never tolerate any single trade/position to be able to have a loss of greater than 1% of my total account balance. I also rarely had more than 10% of my capitol at risk at any time (and usually, much lower than that, only in very strongly trending markets would I go up that high), so most of my money was usually in a money market. I used options, so yes there was indeed some leverage there, but losses were limited and I knew in advance the absolute worst case loss I would incur in a position. One doesn't need to use options though to get the same effect.
Last edited by pward on Tue Mar 19, 2019 10:45 am, edited 1 time in total.

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Re: Is technical analysis all smoke and mirrors?

Post by Beliavsky » Tue Mar 19, 2019 10:44 am

protagonist wrote:
Tue Mar 27, 2018 11:10 pm
Seems like it to me, but what do I know?
The 10-month simple moving average crossover system has a good long-term track record for funds that track the S&P 500. Who knows if it will continue to work in the future. We also don't know if the value premium will exist in the future, or even if the equity risk premium going forward will be large enough to justify the risk of investing in the stock market. One's estimate of the size of the future equity risk premium, value premium, or time series momentum premium will depend on the historical data and one's prior beliefs.

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Re: Is technical analysis all smoke and mirrors?

Post by DonIce » Tue Mar 19, 2019 10:49 am

pward wrote:
Tue Mar 19, 2019 10:36 am
No you don't need to be levered like crazy. There are stocks every year that go up 5x in value.

...

As a rule I never my system would never tolerate any single position to be able to have a loss of greater than 1% of my total account balance. I also rarely had more than 10% of my capitol at risk at any time, so most of my money was usually in a money market. I used options, so yes there was indeed some leverage there, but losses were limited and I knew in advance the absolute worst case loss I would incur in a position.
For one big win to be "all it takes" for the year, you'd want what, at least a 20% return on your total capital? If you only put 10% of your capital at risk at any one time, that big win would need to be a tripling.

Trying to pick stocks that will go up by a factor of 3 or more over the course of a year or more isn't exactly technical analysis, it's fundamental analysis (valuations, balance sheet, management, industry trends, etc). Fundamental analysis CAN work, especially if you pay diligent attention to small companies that are out of the wall street limelight, or if you have special insights into specific companies or industries that aren't widely publicly known. But that's literally the opposite of technical analysis.

Technical trading means using highly liquid instruments (like heavily traded ETFs, futures, options, forex, or big name individual stocks) and trading them based on price movement only.

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Re: Is technical analysis all smoke and mirrors?

Post by pward » Tue Mar 19, 2019 10:56 am

DonIce wrote:
Tue Mar 19, 2019 10:49 am
pward wrote:
Tue Mar 19, 2019 10:36 am
No you don't need to be levered like crazy. There are stocks every year that go up 5x in value.

...

As a rule I never my system would never tolerate any single position to be able to have a loss of greater than 1% of my total account balance. I also rarely had more than 10% of my capitol at risk at any time, so most of my money was usually in a money market. I used options, so yes there was indeed some leverage there, but losses were limited and I knew in advance the absolute worst case loss I would incur in a position.
For one big win to be "all it takes" for the year, you'd want what, at least a 20% return on your total capital? If you only put 10% of your capital at risk at any one time, that big win would need to be a tripling.

Trying to pick stocks that will go up by a factor of 3 or more over the course of a year or more isn't exactly technical analysis, it's fundamental analysis (valuations, balance sheet, management, industry trends, etc). Fundamental analysis CAN work, especially if you pay diligent attention to small companies that are out of the wall street limelight, or if you have special insights into specific companies or industries that aren't widely publicly known. But that's literally the opposite of technical analysis.

Technical trading means using highly liquid instruments (like heavily traded ETFs, futures, options, forex, or big name individual stocks) and trading them based on price movement only.
Not if you use options... If I didn't use options I would have needed to put more than 10% at risk, but that would have changed a lot of the other calculations in the risk management formulas, so other things would change to account for that and defend to the downside. This is basically an algebra equation, you change one variable and you have to change others to keep all things equal. I preferred options because it was a way to limit my guaranteed worst case loss and the leverage allowed for a bit more upside potential when I would catch a big winner.

And no one does not need to use fundamental analysis to pick these stocks. Actually, as a rule I always sold a position before earnings. I NEVER held an individual stock through earnings, and I've never met a legit trader that would. Hell I would even go so far as to avoid trading the major ETF's around the biggest weeks of earnings season. Things are too unpredictable. Fundamentals can be good and stock sells off. Fundamentals can be bad and stock goes up. I wasn't trying to take advantage of fundamentals. I was trying to take advantage of speculation. Trading in between earnings is where you can benefit, where technicals and speculation are the only things driving the price. News black swans do exist, but once again, that's what risk management is for.

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Re: Is technical analysis all smoke and mirrors?

Post by telemark » Tue Mar 19, 2019 11:00 am

My favorite explanation of technical analysis:

Image

Source: https://www.gocomics.com/frazz/2009/09/20

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Re: Is technical analysis all smoke and mirrors?

Post by DonIce » Tue Mar 19, 2019 11:02 am

pward wrote:
Tue Mar 19, 2019 10:56 am
And no one does not need to use fundamental analysis to pick these stocks. Actually, as a rule I always sold a position before earnings. I NEVER held an individual stock through earnings, and I've never met a legit trader that would. Hell I would even go so far as to avoid trading the major ETF's around earnings season. Things are too unpredictable. Fundamentals can be good and stock sells off. Fundamentals can be bad and stock goes up. Trading in between earnings is where you can benefit, where technicals and speculation are the only things driving the price. News black swans do exist, but once again, that's what risk management is for.
So what you're saying is that your technical analysis technique allowed you to consistently pick stocks that go up a factor of 5x or so in between one earnings report and the next? And that you used options to make leveraged bets on these stocks?

Sounds like you should have been a billionaire after just a few quarters.

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Re: Is technical analysis all smoke and mirrors?

Post by pward » Tue Mar 19, 2019 11:06 am

DonIce wrote:
Tue Mar 19, 2019 11:02 am
pward wrote:
Tue Mar 19, 2019 10:56 am
And no one does not need to use fundamental analysis to pick these stocks. Actually, as a rule I always sold a position before earnings. I NEVER held an individual stock through earnings, and I've never met a legit trader that would. Hell I would even go so far as to avoid trading the major ETF's around earnings season. Things are too unpredictable. Fundamentals can be good and stock sells off. Fundamentals can be bad and stock goes up. Trading in between earnings is where you can benefit, where technicals and speculation are the only things driving the price. News black swans do exist, but once again, that's what risk management is for.
So what you're saying is that your technical analysis technique allowed you to consistently pick stocks that go up a factor of 5x or so in between one earnings report and the next? And that you used options to make leveraged bets on these stocks?

Sounds like you should have been a billionaire after just a few quarters.
You need to go back and re-read my first post. I did not say that at all. Actually, what I said was that most trades are small gains or small losses. But that one trade can sometimes make your entire year. Sometimes it's not one specific trade, but a week or a month every here or there where you get a string of decent winners. But most traders are going to take small losses on more trades than they take a gain on. And most gains taken are going to be small. It takes a lot of patience. It's akin to fishing, where you just keep casting the bait out there. Sometimes you catch nothing but seaweed. Sometimes you catch nothing but small fish. Sometimes you get a couple medium fish. And every once in a blue moon... you catch that big one.

Once again, I also say that trading is not for 99.9999% of the population. Most people are better off buy and hold. And I'm currently 100% buy and hold (because I got impatient with all the time and effort in the fishing game, not because I didn't do well). But that doesn't mean that people can't succeed at trading. There are a lot of very successful traders out there that make a killing. My main points in all of this is that technical analysis and trading are greatly misunderstood, especially on this forum. TA is descriptive, not predictive. It's trying to find clues in those descriptions to form some probability judgments that will hopefully lead to gain. Then utilizing risk management strategies to place bets in a way that limits downside risk, but allows you to participate if you are right.

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Re: Is technical analysis all smoke and mirrors?

Post by hdas » Tue Mar 19, 2019 1:17 pm

protagonist wrote:
Tue Mar 27, 2018 11:10 pm
Seems like it to me, but what do I know?
Prof. Aronson's Book is the best resource I know of that can help you with your query. :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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Re: Is technical analysis all smoke and mirrors?

Post by rongos » Tue Mar 19, 2019 1:26 pm

Lots of cynicism about the market in this thread.

And yet we continue to pin all our retirement hopes on the stock market.

Because it works well, until it doesn't.

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Re: Is technical analysis all smoke and mirrors?

Post by bertilak » Tue Mar 19, 2019 3:43 pm

rongos wrote:
Tue Mar 19, 2019 1:26 pm
Lots of cynicism about the market in this thread.
I read the thread and saw lots of cynicism about technical analysis, not about the market.
And yet we continue to pin all our retirement hopes on the stock market.

Because it works well, until it doesn't.
I would say the stock market "works" by my definition: If a market provides a mechanism to buy and sell things considered to be part of the market, then it works. It "works well" if it does so with reliability, assurance, liquidity, adequate speed and accommodates all who wish to participate. Effective regulation helps.

I guess one would need to define "works" differently to say otherwise.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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Re: Is technical analysis all smoke and mirrors?

Post by MotoTrojan » Tue Mar 19, 2019 6:10 pm

Ari wrote:
Wed Mar 28, 2018 3:57 am
mega317 wrote:
Wed Mar 28, 2018 12:45 am
willthrill81 wrote:
Tue Mar 27, 2018 11:17 pm
but Larry Swedroe has come full circle on the topic and now is in favor of it.
This is an honest question: then why does he bother writing and advising others instead of trading constantly and becoming fabulously wealthy?
Where does this idea come from that anyone who can make money investing in anything but index funds can get ultra wealthy in mere days? It's a really weird statement.
If you can beat the S&P500 by 10% you will be ultra wealthy in mere years. Some traders truly believe (or at-least outwardly) that they can achieve 20-25% CAGR for the long-term.

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Re: Is technical analysis all smoke and mirrors?

Post by nisiprius » Tue Mar 19, 2019 8:25 pm

Maybe "overunity engines" (perpetual motion machines) are not all smoke and mirrors, but so many of them are that I don't have any fear of missing out by just ignoring them all.*

In 1940, Fred Schwed wrote:
All I was ever able to conclude from my informal studies was that chart reading is a complex way of arriving at a simple theorem, to wit: when [stocks] have gone up for a considerable time, they will continue to go up for a considerable time; and the same holds true for going down. This is simple, but it does not happen to be so. The easiest way of perceiving that it is not so is to go get a properly drawn chart and look at it.
*If you don't know about overunity, a web search will reveal a vibrant community of enthusiasts, as well as many YouTube videos of impressively big, noisy pieces of spinning machinery--with meters attached to them "proving" that they are generating more energy than they consuming. Here's just one of them. Explain that, you doubters!
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Lancelot
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Re: Is technical analysis all smoke and mirrors?

Post by Lancelot » Tue Mar 19, 2019 8:59 pm

I like Buffett's answer:

As "Warren Buffett" Known as "the Oracle of Omaha". Buffett is a value investor. His company Berkshire Hathaway is basically a holding company for his investments. He said that Technical Analysis didn't work as he has done chart upside down and didn't get a different answer. So at last he concluded that its the wrong way.
No Where for Very Long...

CurlyDave
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Re: Is technical analysis all smoke and mirrors?

Post by CurlyDave » Tue Mar 19, 2019 11:48 pm

David Jay wrote:
Wed Mar 28, 2018 11:19 am
bigred77 wrote:
Wed Mar 28, 2018 9:14 am
I don't know if I'd call it "smoke and mirrors". I prefer "the observed human tendency to associate patterns with random data"
This, and it has been going on for centuries. Shamans used to examine chicken entrails, looking for patterns. Now "technical" analysts examine squiggly lines on a chart.
I am actually quite adept at predicting the immediate future from examining only a small portion of the entrails of my dog when I walk him on a leash.

I think this is far more useful than technical analysis of stocks from chart patterns.

bberris
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Re: Is technical analysis all smoke and mirrors?

Post by bberris » Wed Mar 20, 2019 7:31 am

mega317 wrote:
Wed Mar 28, 2018 12:45 am
willthrill81 wrote:
Tue Mar 27, 2018 11:17 pm
but Larry Swedroe has come full circle on the topic and now is in favor of it.
This is an honest question: then why does he bother writing and advising others instead of trading constantly and becoming fabulously wealthy?
Momentum gives you only a slight edge.

Shamb3
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Re: Is technical analysis all smoke and mirrors?

Post by Shamb3 » Wed Mar 20, 2019 6:46 pm

rongos wrote:
Tue Mar 19, 2019 1:26 pm
Lots of cynicism about the market in this thread.

And yet we continue to pin all our retirement hopes on the stock market.

Because it works well, until it doesn't.
The stock market doesn't work until it does.

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willthrill81
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Re: Is technical analysis all smoke and mirrors?

Post by willthrill81 » Wed Mar 20, 2019 7:40 pm

bberris wrote:
Wed Mar 20, 2019 7:31 am
mega317 wrote:
Wed Mar 28, 2018 12:45 am
willthrill81 wrote:
Tue Mar 27, 2018 11:17 pm
but Larry Swedroe has come full circle on the topic and now is in favor of it.
This is an honest question: then why does he bother writing and advising others instead of trading constantly and becoming fabulously wealthy?
Momentum gives you only a slight edge.
:thumbsup

I cannot fathom why it appears that so many people think that if you were to outperform the S&P 500 for a handful of years that you would own the planet. Outperforming the market by 1% alone, for instance, isn't going to make you "fabulously wealthy." Now if you could convince enough others that you could do so and they pay you enough to make you "fabulously wealthy," that's a different story.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Ferdinand2014
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Re: Is technical analysis all smoke and mirrors?

Post by Ferdinand2014 » Thu Mar 21, 2019 3:19 pm

Yes it is.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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