Can you provide proof for that statement? Probably not. Don’t take it hard on yourself if you can’t, no one can either.
[/QUOTE]I also note that in previous posts you say categorically that all markets are untradable not just Forex but then go on to say that Stock traders potentially can.[/QUOTE]
NO! I said you can if you INVEST in stocks, not TRADE them (I specifically stated that studies have shown that stock traders CANNOT BEAT THE MARKET AVERAGE AND WILL UNDERPERFORM). They are two different things. Please re-read my post:
[/QUOTE]Therefore I can only conclude that you actually don’t ‘know’ trading can be successful any more than WE ‘know’ it can. However, I cant imagine those of us who are successful, such as RhodyTrader, jacking it all in and putting money where the return is less.[/QUOTE]
Congratulations. But the returns of trading are, in theory and practice, zero sum (negative sum if you add in broker costs). Perhaps selective or suvival bias is at work here. COnsidering the number of people on babypips, statistics would determine that there has to be at least 1 or 2 successful traders…by luck. Its the familiar dartboard example. If you hav ea thousand people throwing darts, 9 of them would have thrown bullseye 10 times in a row and be seen as geniuses.
[/QUOTE]At the end of the day, you’re basically coming to a forex forum and telling people it’s not worth trading. You’re talking to the wrong folks as that’s like going to a TVR Car Club meet and telling them their cars are ****e.[/QUOTE]
No. I am doing my part as a good babypips citizen and warning others of the dangers. If you were in a TVR Car Club meet, wouldn’t you be grateful to me if I were to warn you beforehand that the car you are about to buy is defective, thus saving you $20,000.00???
I understand where you’re coming from. But in a zero sum game like forex or roulette, discpline and knowledge doesn’t mean anything. You cannot control luck. You can be the smartest and most knowledgeable, but you cannot beat the market.
If technical analysis really worked, there would have been evidence by now.
The market has existed for 100 years, and NO ONE can provide ANY evidence that tech/fund analysis works.
Just look at this thread, it has been going on for 2 weeks and NO ONE HAS COME UP WITH A SINGLE STUDY TO REFUTE MY CLAIM. I wouldn’t blame anyone though, because such studies do not exist. and those that do actually prove the opposite: that tech/fund doesn’t work.
No offence, but thats like saying that just because there is no evidence of chocolate cakes orbiting Jupiter doesn’t mean chocolate cakes aren’t orbiting jupiter.
But if its like any other research I’ve read on AI trading, then its going to end up like the rest of those neural trader studies.
AI trading worked in the beginning of the 1990’s when machine trading first emerged. But as every bank started utilising AI trading, AI trading stopped working. So many people are competing with each other in trying to time the market and adapting their robots that new studies show that AI traders no longer have an advantage.
Yes I have. and most, if not all of them, conclude that no edge exists in tech/fund analysis. The ones that do are the following:
The January effect study: No longer relevant because the edge evaporateed right after the study was published
Trend following studies: see my earlier posts on momentum trading studies and why trend following can no longer work, and the studies that prove it no longer works
On the contrary, these academic researchers are usually ivy league traders themselves who work for goldman sachs and the like (and later retire as professors because they become so discouraged by their research). They understand trading more than anyone does.
agreed. But the problem lies not in the execution, but the concept of trading. It is zero sum to begin with, and that should raise red flags.
On the contrary, profit and loss over a large number of trades is the true test of a systems robustness. Quite literally, a system has to “put the money where its mouth is”.
But these studies show that a perfectly optimised, perfectly carried out TA, doesn’t work. In fact, what I’m talking about here are perfectly carried out TA systems.
Agreed. But again, TA as a whole seems to be proven by every study undertaken in the 20th and 21st century to be an unworkable concept. I am still open minded, but we have to take the studies at face value currently.
Yes I have, and its no different from a coin flip.
Even my roulette results were better.
We measure properties by using indicators of the TA, otherwise how is anyone going to study TA?
Price action, price patterns, candlesticks, support and resistance, moving averages, every single permutation of TA as defined by babypips. Lets start with some of the technical patterns described here for instance, like double bottoms.
Big players suffer the worst slippages (by up to hundreds of pips) because of the big volume of their trades. By the time they are in a position, the price has already been moved by them close to their target point.
Hogwash. Yes, they face the prospects of greater slippage, but they also know when and how to get trades executed to minimize the impact of their actions.
So, you want to see at least 100 trades, and preferably 1000 or more, which demonstrate an edge. Now, what’s the benchmark? What are we measuring the system(s) performance against to know if we have an edge or not?
Again, you cannot prove randomness. It is impossible. All you can do is provide evidence for it. Like I said, lack of proof is the reason Efficient Markets and Random Walk remain theory/hypothesis.
That won’t work because “Survivor Bias” will be brought up to refute it as evidence.
Survivor Bias, by the way, is at work in stock market indices and it part of why they have a long-run positive pattern, which is why index trading strategies are so widely recommended.
by survivor bias you mean that given a large enough group, some will be succesful purely by chance? But then I would say that if there are some who are consistently succesful over long periods of time and large numbers of trades then it has to be more than just luck. But you are right someone will always find a way to argue the point.
my anthropic principle of forex. Technical trading works because if it didn’t then there wouldn’t be any succesful technical traders.
I think you are missing the point. I suggested spending 6 months flipping coins to determine a trade direction long or short (or even using one of those useless EA’s you’ve been testing)
Are you seriously telling me that you couldnt notice any differences between the two groups of winners and losers ? wasnt there something that the majority of winning trades tended to share ?
Are you seriously telling me that the difference in frequency distribution in for example MFE or MAE between the two groups was statistically insignificant ?
Are you seriously suggesting that the longer term trend didnt have an influence on the results ?
Are you seriously suggesting market volatility didnt influence the outcomes ?
If you truly cant see the difference then its little wonder that your failing to apply TA correctly. Go back an re check your results cos your missing a trick.
All of those things can be determined by TA. Not a single academic paper that I’ve read (and I’ve read my fair share) indicates to me that their authors actually understand technical analysis because they dont. Theyre testing ill thought through concepts, with a complete absense of common sense. Seriously, these people are clueless, if they where traders, they’d be making money, not teaching dimwits for a living.
Well once again this is one of those threads that I PROMISED myself I’d not get ‘involved’ in but when I saw the posts by ‘rhodytrader’ and ‘TalonD’ I JUST could not ‘help myself’!!! LOL!!!
Survivor Bias, by the way, is at work in stock market indices and it part of why they have a long-run positive pattern, which is why index trading strategies are so widely recommended.
Listen to ‘the man’ (‘rhodytrader’): he KNOWS what he’s talking about!!!
this whole question can be settled quite easily. Are there any traders here who make a good living by trading just with technical analysis?
This should not be done because that would deprive us all of the INEVITABLE ‘entertainment’ that this thread is going to provide over the next few weeks!!! LOL!!!
As for the subject of the thread (and this is simply a personal note): I believe that there is a difference between ‘technical analysis’ and ‘technical trading (systems)’. (Sorry: I know that may not make sense i.e. I know what the point is that I’m trying to make but I’m unsure as to how to express it correctly). Put another way: ‘technically’ there is no reason for the indices to be moving in the direction and to the extent that they are today i.e. I saw the ‘January Effect’ being cited earlier on in this thread. The indices didn’t fall enough during December to warrant today’s reversal in ‘sentiment’ (‘survivor bias’???) (particularly not with all the ‘moves’ that China is ‘pulling’ of late). So ‘technically’ the January Effect’ (as but one example) is questionable (as was noted). However: there are ‘technical trading systems’ that will get you short these indices when they come down (which they will) and get you long again when the time is right (the same ‘technical trading systems’ that would have got you long them a few months ago or short them when both sub-prime and the credit-crunch ‘hit’). I’m not sure if my ‘contribution’ here makes any sense at all (I MYSELF know what I’m trying to explain though believe it or not).
I’ve heard of the phenomenon to which you refer too however (on Bloomberg TV) so who knows???
While I’m posting links though here is one that quite possibly may (or may not???) have some relevance to this thread i.e. why (or why not???) technical and fudamental analysis does (or does not???) work:
(Reading my above note I think I missed my ‘calling in life’ i.e. that’s JUST the kind of statement that an analyst would make: basically ‘non-committal’)!!! LOL!!! Anyway: the link deals with psychology (once again) and our system of ‘beliefs’ and is that not why technical and fundamental analysis does (or does not???) work i.e. ‘self fulfilling prophecy’ (and all that)??? (Come to think of it: I think the subject matter of this entire thread is WAY ‘over my head’)!!! LOL!!!
Regards,
Dale.
Edit:
For what it’s worth (this is the first time I’ve ACTUALLY checked this): the S&P 500 closed LOWER for the month of January 2010 and spent most of its time in November and December 2009 ‘chopping around’!!! So much for EITHER ‘effect’!!! LOL!!!
Edit 2:
This analysis (call it ‘technical’ or ‘fundamental’) ‘gels’ with me though:
I personally think that the ‘gamblers’ were out in full force today (at least as far as the indices are concerned) although interestingly enough they all rallied in January last year too before ‘tanking’ quite heavily. (I fear I’ve gone WAY off topic again here though. Sorry for that i.e. I’m not getting any ‘traction’ on the threads so far this year)!!! LOL!!!
Going by the book “The Master Swing Trader Toolkit” the market today is a free for all among competing bots. Bots have no survival instinct so they push the market to wild extremes in a chaotic feedback manner. Gone are notions of perfect market efficiency and randomness. Now it’s a chaotic-dynamic self-referential semi structure more akin to pointing a camera at it’s monitor, or glazing into the distance between an opposing set of mirrors.
Miss the old days when spotting the trend required little more than a pulse. Of course it also required millions to get a FOREX account. :rolleyes:
Thousands of studies have shown that tech/fund analysis/systems/indicators/tools has no more predictive value than a coin flip. As far as we know, these studies show that the market, or at least all forms of systems trading, is random.
You can also prove it to yourself. Take your pick, test as many indicators or systems as you like. Test them in combination if you want. Use as many backtest results as you want. You will find wins and losses are evenly distributed, minus the amount of trades times brokers costs. Your equity curve is downward in proportion with the number of trades taken. I have confirmed this myself, so can you.
If the market wasn’t random, why do moving averages, bollinger bands, trendlines have no more predictive value than a coinflip, especially since these are the very systems used by traders here??
If numerous studies have shown that wins and losses for all systems are evenly distributed like the results of a coin flip, that represents extraordinary evidence that the market is random. There is more evidence for the random walk ‘fact’ of the market than the theory of evolution!
