Technical Analysis Fallacy

Appreciate your Welcoming post.

First 100 pages read. Very interesting points of view.

http://www.forexfactory.com/showpost...66&postcount=1

To Quote FTI<

Apologies
-no mentor, or course, or literiture can give anyone the holy grail to the secrets of success in trading in the markets.
-"and no one, sells the goose that lays golden eggs, probably the eggs, but never the goose"
Nevertheless, I will humbly attempt.

Since the late 70s and into the millinium.
Many "engineers" have made public, their inventions of reading probabilities into Technical Indicators. Many Technical Analysis Gurus came to the forefront to sell their research findings. To name a few,
The Grand daddy being Charles Dow and his Dow theory which later lead to the creation of the Dow Jones Indexes.
Rene Descarte who introduced the Spiral studies.
Leonardo Da vincci who fostered the fabonacci principles,
W.D. Gann, who introduced Cyclic Studies of Squaring time and price.
R.N.Elliot, who introduced the Elliot Wave Studies
W.Wilders.Who introduced the mathematics of calculating overbought and oversold markets by his introduction of the DI+,DI-, ADX lines and the Relative Strength Index.
The Stocastics, MACDs, ……………………………...etc

If one was to impliment all these studies onto their charts. What you will see is a beautiful piece of art, displaying very impressive hog wash, that do nothing but dazzle the uninitiated. If anything else it 'll confuse you even more.

Then you have the charting specialist who have introduced many ways to chart eg,
Linear Charts, HiLoClose Bar Charts, Japanese candlestick charts, Point & Figuring, John Hill's Bar Chart congestion & reversal patterns, reverse point waves, pivots, fractuals, ………..etc

Today, we find lots of originally and mutated techniques and methodologies available to the Chartist or Technicians.

What many fail to realise, is that all these studies, basically are statistical tables plotted in graphic form to present a "picture" to assist traders in their decision process. The maxim being, that a picture tells a thousand words.

"It is not theirs (the charts) to reason why,
But to signal Sell or Buy,
For the traders to do or die,
Hoping that the signal does not lie,

I would, from my many years of studies, go so far as to say, that they all work, some more than others but they all do serve a purpose. (to give traders, the "guts" to do or die)
If I may borrow from the quotes of Sir Winston Chirchill.
"That you can lie to some people all the time, all people some of the time, but not to all people, all the time."
Similarly, theses studies can work in some market conditions all the time, all market conditions some of the time, but not all market conditions all of the time."

Think about what I've just quoted very carefully.

The problem with some people and some professional Technical Analyst today ( being a certified Technical Analyst myself ) is that they use the Technical studies as if, it were the "Holy Grail" of trading & their pathway to the millions.

How far that is from the truth.
Any person with a good brain on their shoulders, will ultimate come to the realisation that these are just tools. Tools that are built on historical and lagging databases. Moreover the rigidity of the parameters used in the studies imposes rigid responses to changing market conditions. Have we forgotten that the market is a live beast that learns and adapts to trader behaviours? Many have forgotten that the market is the sum total of the behaviour of the participants engaged in the market place. These tools are used for measuring the markets health, not so unlike the thermometer to a doctor, or the measuring tape to a carpenter, just a tool.

Then how is it possible that these studies themselves can be considered the "Holy Grail"?
It may be due to ignorance (being new and uniniatiated), lazyness, or just plain stubborness ( a little knowledge is a dangerous thing). Of course it is not nice for me, to tell you about those who have "a little knowledge", trying to scam those who know less than them. That's another story.
Some do so, because of a very new disease discovered recently, the sickness of "the chance".
If you use the Technical studies as your "Holy Grail", I have only one word for you, GAMBLER.

I put it to you, that, to consider your Technical Studies to be more than what they are is a "fallacy" in trading the markets, not so unlike martingale gamblers' fallacy. It can lead you to a very dark place.

What many traders do not know, or may fail to recognise, is that your success in taming the markets, is comprised of a mix of ingredients. Not so unlike in baking cakes.
I suggest three very important ingredients. One is " Market Structure ", the other is "YOU", then Capitalisation. Of course there are many more components, for the moment these seems of dominant importance, in my humble opinion.

I hope you will think about what I've said very carefully.
I shall try to push these doors ajar for you slowly to show you the light at the end of the tunnel (please hope its no on-coming train), God willing.

regards

Hello Rednose. I have to read this thread again because i still dont undersand some parts... today i am already tired. ((Tomorow(today))yesterday) i will continue with studying. Good nite.

Well said auxesis. I thought about adding a few comments, but I think you said it already.

Edit: Were you cheering for the Lakers or Celtics?

Hi Guys,

It's me again I'll feel guilty if I don't confess and also it might be good for newbies too.

few months ago I had comments about Why don't we use SL and enter with big big troops(to reduce trading time) since we won't make any money anyway if we only do rescuse job.

And GEfx told me politely to read TAF again carefully instead of telling me "you stupid idiot why don't you try it yourself".Thanks GEfx.
Well I did & the results came out I really was a really stupid idiot.
Eventhought my winning ratio was good but once I entered with big big troops instead of scout then my heart was shaking I normally took profit 7-10 pips(worry about losing) and stop loss 15-20 pips ate all the profit so I gained nothing.And also one person posted some info in the thread then I really understand more
SFO Magazine Article from the site
http://www.sfomag.com/ArticlePrint.aspx?ID=598

So I would like to apologize to everyone in this thread for my stupid question few month ago I've learned my lession.

TO newbies:- might be curious about how much really need for capital well everything in this thread(page 1-200 we have to dig & dig & dig to get all the info into our brain if one time not enough then dig 2-3 times) and also remember SCREEN TIME.
I recall Fti & Mashewara said never loss 300% of your daily average. I was stupid for so long until lately I read sir ray(1234) comment. Page 1504 post 15808
http://www.forexfactory.com/showpost...ostcount=15808

Then I"ve worked out:- Let say we expect daily average $100 so $300 is our limit and 2%mm so our capital should be = 100/2*300 =$15,000 That's it so simple. it's in there 1-200 pages.
Note:- Never expect more than 2%mm ONly experience trader can use up to 10%mm. So we beginner 2%mm is to save our wallet.

Lately I've seen we were talking about spiral of sprial and many more until I got lost, well, anyway I'm not up to that stage yet. I said to myself "You can't handle the basic how are you going to master the advance"
IMHO to newbies only just keep it simple.

Lately I've studied dongsky(full time trader) Journal see the way he trade 'is very very simple' and attack sequence he is using only 1,1,2 or 1,1,3 only but he've made a lot of money. Thanks dongsky for your journal I've learn a lot from you.
http://www.forexfactory.com/showthread.php?t=237739

So I think beginner just Keep it simple you still can make money, Look at dongsky journal - no need much of Kung Foo BUT he has the right capital
Eventally 'sprial ' & 'sprial of sprial' will come to you. Don't forget SREEN TIME

Remember Fti have 20-30 yrs experience in trading we can't put everything within few yrs. we still can make money with 1,1,2 or 1,1,3 me myself only do 1,1,1.

Again I apologize for my comments few months ago.

Best regards,

PS. Hope you all making lots lots of pips & have a good weekend.

Since they acquired the old Supersonics down the road now Thunder, my loyalties have shifted, but grew up a Lakers Fan. Better half from New England is a hard core Celtic, we had many a good bets years ago with Bird and Magic. Doesn't feel the same nowadays.


Boys of Summer, I like the Yanks.

Originally Posted by Gro http://cdn.forexfactory.com/images/buttons/viewpost.gif
e.g. Gann angles if you "there" not see "50%" = Forget it.
You prefer to remember that the retracement more than 50% "can" mutate into the opposite trend.


Gro? What is your point? Yes, it "can" but how will you know? Maybe it will maybe it won't.

In the Tunnel Book, Gann quoted "A Psalm of Life" by Henry Wadsworth Longfellow. 1807–1882
http://www.bartleby.com/102/55.html


Trust no Future, howe'er pleasant!
Let the dead Past bury its dead!
Act,—act in the living Present!
Heart within, and God o'erhead!


Do you understand?

I hadn't read the thread for a while so now that I'm catching up I have just one question - What the hell is going on with this thread again?!
For those who forgot it - this is fti's thread about actual trading and as he explicitly pointed out on several occasions everything is already given in the thread. In other words - everything worth studding on this MO is already there, just stick to it. So read the damn thing, try to understand it, try to implement it, then join the talks, post some trades and discuss.
You want to discuss "mystery within mystery" stuff - well I'm sure Forex Factory can take one more thread for those interested in such things.

No wonder he doesn't want to take part in discussion here any more.

Regards

NP about me and Gann studies. I will do this: because i believe, that square of 9 can provide structured-dimensional picture of price and time,
- i will make squares of nine based on prices in the chart.
- purpose is to find out if it is reliable, logicaly understandable
If somebody wants to add st in this, please appreciate. Thank you. If my research will be interesting, i will post results.

Hi Rednose

Beware the "illusion of understanding and illusion of self-control".

Regards

I think you make some valid points and I definitely enjoy your cheeky style, LOL

As to your initial capital question - it depends on what you're looking to accomplish and your personal risk tolerance. Basically, using smallest lots available and moderate risk management (MM) you could start with as little as $4-500.

Thank you .

“I only know that I don't know anything”; ...

Fana, that's fine but you are in the wrong thread. If you didn't understand the basics here then as fti mentioned, read it again carefully. If you want to pursue the mainstream Gann studies you'll probably find other threads more in tune with your thoughts.

three days and three nights in Hell's own soul, charts observation without examining and comparing ... it is the right learning.

Hi Zoran:
I wrote: NP about me and Gann studies. I will do this: because i believe, that square of 9 can provide structured-dimensional picture of price and time,
- i will make squares of nine based on prices in the chart.
- purpose is to find out if it is reliable, logicaly understandable
If somebody wants to add st in this, please appreciate. Thank you. If my research will be interesting, i will post results.

I do not want to burden the thread with for many "undesirable" informations and thoughts. But now i dont understand you.
...I will be posting ONLY if i find it is worth it.

"you have to be a cat and not be a snake", lines and angles are in the mind trap.

"dogma kills"

After years groping in the dark fti has thrown open the light switch, this thread is my tunnel through the air.

And what do peeps do? They want to go back to studying chicken entrails.

Go ahead dig a tunnel to China to find oracle bones

You are making a mockery of what's taught in the thread

sure enjoy the trip.
Yeap he needs clients,don't he.?
There are fools in this world, the worst are the 'intelligent' ones.

regards

heh, gotta keep jest amused y'know. i can tell he missed me. i wonder if the "-" is hiding a few zeros. $40,000,500 starting capital. got it. thanks for the capital opinion though. appreciate the perspective.

also, i wonder if some of the things fti chooses not discuss / reveal (was kamikaze the analogy used? i forget) is along the lines of getting to the point that one needs to push enough capital through the market to start moving it... and hence manipulating it. not sure if that is even possible. if a snowball keeps heading in the wrong direction then i guess all that is left to do is move the world beneath it. fti himself says that whatever 'it' is he is no longer in a position (retail capital??) to have use for 'it', and hence it was not worth mentioning. curious.

as an outsider if i'm a talking donky redesigning the wheel then ignore me.