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Technical analysts are very confused

  • #1
  • First Post: Jun 7, 2007 4:26am Jun 7, 2007 4:26am
Is it just me or have u also read the some so called "experts" do technical analysis on a daily basis. I find their analysis very entertaining. Maybe they think they are smart and market readers, but in my humble opinion they only show their ignorance and state the obvious. BECAUSE NOBODY HAS CONTROL OVER THE MARKET. Nobody knows what the market is gonna do. (That is why some use indicators. And the most posts/discussions are found in the Trading System categorie. Everyone is looking for a system that can predict the market)

In short all the technical analysis are saying is: "The Eur/Usd might trade up, but then again it might also trade down."

That is like saying: "It might rain tomorrow, but then again it might not rain tomorrow"

Please correct me if i am simplifying this or overlooking some very important calculations/formulas/guessing
  • #2
  • Jun 7, 2007 4:33am Jun 7, 2007 4:33am
I think it has more to do with determining what has a higher probability of happening not what is absolutely going to happen.
  • #3
  • Jun 7, 2007 5:03am Jun 7, 2007 5:03am
It might sound like confusion, but when you learn to read and look for market conditions instead of direction it all fits into a useful picture.

At any given time there is sufficient technical and fundamental info to give you a degree of certainty about what price is doing and may do. Learn to guage market conditions not market direction. This means that you will not have just two choices (up or down), but three (trade with the trend, trade against the trend or do not trade since you are not sure).

My trading has improved greatly since I have changed my perspective to look at condition not direction.
  • #4
  • Jun 7, 2007 5:52am Jun 7, 2007 5:52am
[quote=KudzuFX;1460418]It might sound like confusion, but when you learn to read and look for market conditions instead of direction it all fits into a useful picture.

Hi Kudzu,

I'm a newbie. Would you mind just defining 'conditions' for me.

Thanks
  • #5
  • Jun 7, 2007 5:57am Jun 7, 2007 5:57am
It's been a long time I dont listen to market analysts. I have come to the conclusion that most of them got no freaking idea of what they talk about. I just listen to my own system and my own expertise.
  • #6
  • Jun 7, 2007 7:52am Jun 7, 2007 7:52am
I agree, no one has control over the market, but what you do have a lot of is self-fulfillment. With technical analysis, certain technical triggers become strong motivation for crowds of people to act in a similar pattern, and if enough of the people act, it becomes true...sort of like curve fitting. Obviously it doesn't happen all the time because in order for it to happen all the time, the same ratio of people doing it to not doing it has to be the same.

That's why sometimes the price bounces off the 100-EMA and sometimes it doesn't.

Quoting iandekoker
Is it just me or have u also read the some so called "experts" do technical analysis on a daily basis. I find their analysis very entertaining. Maybe they think they are smart and market readers, but in my humble opinion they only show their ignorance and state the obvious. BECAUSE NOBODY HAS CONTROL OVER THE MARKET. Nobody knows what the market is gonna do. (That is why some use indicators. And the most posts/discussions are found in the Trading System categorie. Everyone is looking for a system that can predict the market)

In short all the technical analysis are saying is: "The Eur/Usd might trade up, but then again it might also trade down."

That is like saying: "It might rain tomorrow, but then again it might not rain tomorrow"

Please correct me if i am simplifying this or overlooking some very important calculations/formulas/guessing
  • #7
  • Jun 7, 2007 8:26am Jun 7, 2007 8:26am
With technical analysis, you just try and increase ur chances of success. When you start trading, ur chances of success are 0 or maybe 10-20 %...u learn, experience, study and try to increase that percentage to more than 50% so that u r sucessful on a consistent basis...
  • #8
  • Jun 7, 2007 8:34am Jun 7, 2007 8:34am
Vegas operates an a 4% margin in their favor. Meaning there is a 46% chance any client will win, but a 54% chance the house will win.

Technical analysis is simply that, skewing the probability of success in your favor, after that it is all margin management.

If you backtest a certain set up that pays out 67% of the time over the last 4 years, and has a risk/reward ratio of 1/1.5 or more. You are skewing the odds in your favor. Win or Lose, you know probability is on your side.
The basis of a democratic state is liberty. ~ Aristotle
  • #9
  • Jun 7, 2007 10:36am Jun 7, 2007 10:36am
[quote=bundubill;1460447]
Quoting KudzuFX
It might sound like confusion, but when you learn to read and look for market conditions instead of direction it all fits into a useful picture.

Hi Kudzu,

I'm a newbie. Would you mind just defining 'conditions' for me.

Thanks
Hi Bund,
I wrote an article on Condition Not Direction. It's in a pdf but too large to upload and I don't know how to compress it to upload to FF.
You can PM me and I'll send it to you.
Thanks,
  • #10
  • Jun 7, 2007 10:54am Jun 7, 2007 10:54am
Quoting WTB
It's been a long time I dont listen to market analysts. I have come to the conclusion that most of them got no freaking idea of what they talk about. I just listen to my own system and my own expertise.
i agree with you...take today thursday 8 june for example...most techical analysts predicted the market to go up for eur/usd and gbp/usd....and what happened...the market went down...and as far as i know there was no market moving news today
  • #11
  • Jun 7, 2007 10:55am Jun 7, 2007 10:55am
[quote=bundubill;1460447]
Quoting KudzuFX
It might sound like confusion, but when you learn to read and look for market conditions instead of direction it all fits into a useful picture.

Hi Kudzu,

I'm a newbie. Would you mind just defining 'conditions' for me.

Thanks

i hear you....

i dont use market conditions...i buy when the price is low and sell when the price is high...that is my recipe...and so far it is working great
  • #12
  • Jun 7, 2007 10:58am Jun 7, 2007 10:58am
[quote=bundubill;1460447]
Quoting KudzuFX
It might sound like confusion, but when you learn to read and look for market conditions instead of direction it all fits into a useful picture.

Hi Kudzu,

I'm a newbie. Would you mind just defining 'conditions' for me.

Thanks
Here you go. I think I figured out how to upload it to FF.
Attached File(s)
File Type: pdf KudzuFX Market Conidtions.pdf   426 KB | 557 downloads
  • #13
  • Jun 7, 2007 10:59am Jun 7, 2007 10:59am
Usually technical analyst are looking at trendline and key level support.

Anyone can do the same so i think they are not worth reading.
  • #14
  • Jun 7, 2007 11:00am Jun 7, 2007 11:00am
Quoting ns_karthik
With technical analysis, you just try and increase ur chances of success. When you start trading, ur chances of success are 0 or maybe 10-20 %...u learn, experience, study and try to increase that percentage to more than 50% so that u r sucessful on a consistent basis...

i disagree completly...if you start trading u have a 100% chance of success....i have never in my life have a loosing trade...at it is all contributed to my money management. i buy when the price is low and sell when the price is high...some trades are closed within minutes...others take hours...some take day...some weeks...some months....but i never gear higher than 1:5

i have been trading live for almost a year now...and never had one loosing trade...while i make around 800-1000pips a month playing eur/usd and gbp/usd
  • #15
  • Jun 7, 2007 11:01am Jun 7, 2007 11:01am
As most people have already said, analysis is moving the odds in your favor. Those who say they can pinpoint exactly what the market will do tomorrow or next week are probably full of sh*t anyway, as most professional traders don't know if the market will definitely go in their direction the next day.

Quoting iandekoker
That is like saying: "It might rain tomorrow, but then again it might not rain tomorrow"
Yes... weatherman do in fact say this, and yet everyone listens to them... right? I mean, when was the last time you had an accurate forecast for the coming weekend? And when they do say "tomorrow will be rain", notice they say something like "70% chance of rain".
  • #16
  • Jun 7, 2007 11:02am Jun 7, 2007 11:02am
Quoting Vensik
Vegas operates an a 4% margin in their favor. Meaning there is a 46% chance any client will win, but a 54% chance the house will win.

Technical analysis is simply that, skewing the probability of success in your favor, after that it is all margin management.

If you backtest a certain set up that pays out 67% of the time over the last 4 years, and has a risk/reward ratio of 1/1.5 or more. You are skewing the odds in your favor. Win or Lose, you know probability is on your side.

why do u even give the house a chance of winning. That is not smart. Make sure the house cant win, gear lower
  • #17
  • Jun 7, 2007 11:07am Jun 7, 2007 11:07am
Quoting bluebuddha
As most people have already said, analysis is moving the odds in your favor. Those who say they can pinpoint exactly what the market will do tomorrow or next week are probably full of sh*t anyway, as most professional traders don't know if the market will definitely go in their direction the next day.


Yes... weatherman do in fact say this, and yet everyone listens to them... right? I mean, when was the last time you had an accurate forecast for the coming weekend? And when they do say "tomorrow will be rain", notice they say something like "70% chance of rain".

on a funnier note...i live in south africa...summer rain region...we dont listen to the weather man...if we want rain we just organize a cricket game or a bbq....then it is sure to rain....lol
  • #18
  • Jun 7, 2007 11:16am Jun 7, 2007 11:16am
Quoting iandekoker
on a funnier note...i live in south africa...summer rain region...we dont listen to the weather man...if we want rain we just organize a cricket game or a bbq....then it is sure to rain....lol
Yes... that seems to work here in the US as well.
  • #19
  • Jun 7, 2007 11:26am Jun 7, 2007 11:26am
Quoting iandekoker
. Everyone is looking for a system that can predict the market)
This is why people jump from system to system. In my opinion, technical analysis should never be about predicting. Instead, giving guidelines as to how to react to what is already occuring. The weather radar should be the technical analysis, the weather man should never predict whether a storm will occur. Instead, use some information he sees to try and help him to conclude what will happen.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #20
  • Jun 7, 2007 12:43pm Jun 7, 2007 12:43pm
Quoting StockKJay
This is why people jump from system to system. In my opinion, technical analysis should never be about predicting. Instead, giving guidelines as to how to react to what is already occuring. The weather radar should be the technical analysis, the weather man should never predict whether a storm will occur. Instead, use some information he sees to try and help him to conclude what will happen.

Stock,
well said,
if we make a habit of predicting we will trap ourselves in a tailspin of losses.

That does not mean that techicals are not important. They are important for getting a handle on current conditions.

I like your weather man comparison. Did you know that even with all the technology they have now that the computer models used to forecast weather are based on adding a long string of 10 to 15 minute segments. They begin with the assumption that they can be nearly 100% sure about what the weather will be in the next 10 to 15 minutes. Then the computer projects out the next 15 minutes segement and the next based on the last two and the next based on the last three and so on. That sounds like MTF analysis to me.

What we as traders are looking for is "conditions that are favorable for the next storm (trend)" We cannot predict up or down with 100% certainty, but we can EXPECT a reaction in this direction or that direction based on current conditions.

Thanks and happy hunting,
Attached File(s)
File Type: pdf KudzuFX Market Conidtions.pdf   426 KB | 434 downloads
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