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Technical Analysis Fallacy

  • #44,161
  • Edited 8:14am Jan 1, 2014 7:59am | Edited 8:14am
If the mind still cannot get thru the math.
then think this
if i played russian roullette with you what the chance you get shot in head in 1:10 chamber.
what the odds in 5 round rolling cartrridge.

and whats the odds that chamber is loaded of you click 100 times on a 1:10 cartrridge?
hows about we do it with automatics? You play white, so you first.

regards

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  • #44,162
  • Jan 1, 2014 8:32am Jan 1, 2014 8:32am
remembered a voice.

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  • #44,163
  • Jan 2, 2014 12:55am Jan 2, 2014 12:55am
Quoting fti
{quote} [...] Indicators have no capacity to be predictive, by virtue that they are derivatives of historical database. [...]

Hi fti,

Indicators indeed have predictive value, in the sense that they present statistical information. Just put a 5 EMA on any H4 chart and watch how using only 'price crossing the moving average' (buy/sell on the opening of the next four hour candle) will make you money. Backtest this 'technical trading method' with any basic moving average EA (set short ema to 1, long ema to 5, take profit and sl to 1000 pips as to force the EA to close and open trades when price crosses the 5 ema) and gaze at the outcome :-) Manually managing these trades can improve these results drastically (reducing draw down - an EA will let profits slip away, because it waits for the crosses, even if price 'spikes' 100-200 pips back the wrong way - EA's also won't stop trading during long choppy periods, but even then it will survive 5-10 year backtests and make decent profits, especially on the most volatile pairs, like the GBPJPY).

Having said that, I do agree that relying solely on 'indicator signals' for making money in Forex is rather naive (there are certain factors one has to bring into the equation, such as 'price manipulation by the big players' - of which 'stop hunting' is a good example - human psychology, etc.), but dismissing them altogether is tilting the balance the other way.

Just my two cents.
95% of the people don't believe 100% they can win, that's why they lose
  • #44,164
  • Edited 4:04am Jan 2, 2014 2:38am | Edited 4:04am
Quoting Ronald123
{quote} Hi fti, Indicators indeed have predictive value, in the sense that they present statistical information. Just put a 5 EMA on any H4 chart and watch how using only 'price crossing the moving average' (buy/sell on the opening of the next four hour candle) will make you money. Backtest this 'technical trading method' with any basic moving average EA (set short ema to 1, long ema to 5, take profit and sl to 1000 pips as to force the EA to close and open trades when price crosses the 5 ema) and gaze at the outcome :-) Manually managing these...
Hi ron.
you made point that EMAs have predictive value.
maybe you should think carefully.

Exponentiated Moving averages. What are they?
They was built ons of SMA(simple moving averages)
exponenting just makes the recent data more relevant to older data of the series by adding weightage to more recent data.

So what does averages show? They try detemine the mean of the data range of your selected parameter fence(selected time envelope).
The algorithm basically trys track the markets based on the price data its receiving and its relevance within the time scope that one has chosen.
Has it any capacity move the price?

At its best, all it can do is to smooth out the range volatility, trying determine mean prices. (Any one making mean prices to trade? added: when i naughty, sometimes i did make choice prices to trade, only for small. naughty me)
This is great if volatility is a constant. But unfortunately volatility is a tradable component of risk managing.
So where the value?

I would think if there's any value , is for those who are not pacing the markets.
For those already pacing prices, may be more a distraction having the averages pinned and decorated on their screens.
And can be very paralysingly numbing when volatility fluxes, and make trader irresponsive to market, the ultimate lag.

3 cents.
sorry 2.1 cents?

regards

A word about back testing.
if you back traced everyone's memoirs who ever lived on earth , they all saints.
Only we know its not true.
BUT BEFORE ALL THE NON SINNERS STONES ME.
TRY THINK WHY THAT IS SO.

Has it any value?
of course it has.
even i do put them up sometimes when i lost to what the jim beans the markets doing.
Just to get feel back.

To trade it i gotta be a robot. who not cares about your money.
But surely to the lost any guidance is appreciated.
to be continually guided, gotta be handicapped.
  • #44,165
  • Jan 2, 2014 4:09am Jan 2, 2014 4:09am
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  • #44,166
  • Edited 8:35am Jan 2, 2014 7:50am | Edited 8:35am
i like. but how do i get there?

http://www.zillow.com/blog/2012-03-0...nd-in-florida/

oh have H pad. Ok need have talk with buddy.
$12 is veli steep hor.
only feesible if can make HOTEL.
either that or make traders training centre. must repaint pink. how many suckers. and where to build marshals jailcells.
5000sq so cells 5 footers.

but truely is best water home. Lots water no mosquitoes. Maybe a few sandflies.
oops same problem, where suppose be the padi fields?
ok. back to sg island.
  • #44,167
  • Jan 2, 2014 8:44am Jan 2, 2014 8:44am
oops gave me a another 60 %scare.


http://worldnews.nbcnews.com/_news/2...-years-message
  • #44,168
  • Jan 2, 2014 8:52am Jan 2, 2014 8:52am
Hello hello, takin time out from my busy schedule
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  • #44,169
  • Jan 2, 2014 8:54am Jan 2, 2014 8:54am
Quoting 4tiger
Hello hello, takin time out from my busy schedule {image}

whats that ? fish sauce?
wow, time's leaving me behind.
new trend?

have ice, so must be real expensive, huh?

gan bei. happy 2014, meow

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regards
  • #44,170
  • Jan 2, 2014 9:05am Jan 2, 2014 9:05am
Quoting 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...
Excellent thread,OP! When I first started the forex game 5 years ago I made some and thought I was good. Market conditions changed a few months later,remember when the Jap LDP lost an election for the first time in 50 years in August 2009?
I lost all my earnings and then some. I took time off to mentally recalibrate and realised the problem wasn't with me but rather my system. After much trial and error I concluded news trading whereby you wait for the data to move the particular pair is the safest method.
20 Year veterans will swear up and down on the basis of their pro analysis gold is bearish only to see a 20 dollar spike and/or vice versa. I learned to trade the news and equally important to believe in what I see not any fancy analysis.
  • #44,171
  • Jan 2, 2014 9:11am Jan 2, 2014 9:11am
Round 2, Boss

This bottle is twice as expensive hehe
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  • #44,172
  • Edited 9:33am Jan 2, 2014 9:18am | Edited 9:33am
Quoting 4tiger
Round 2, Boss This bottle is twice as expensive hehe {image}
fierce flower? wah!!!

give me your car keys.
wait i get my "daughter red".女兒紅

gan bei, shalom.


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regards
  • #44,173
  • Jan 2, 2014 9:29am Jan 2, 2014 9:29am
Quoting kiarie2009
{quote} Excellent thread,OP! When I first started the forex game 5 years ago I made some and thought I was good. Market conditions changed a few months later,remember when the Jap LDP lost an election for the first time in 50 years in August 2009? I lost all my earnings and then some. I took time off to mentally recalibrate and realised the problem wasn't with me but rather my system. After much trial and error I concluded news trading whereby you wait for the data to move the particular pair is the safest method. 20 Year veterans will swear up...


regards
  • #44,174
  • Jan 2, 2014 9:39am Jan 2, 2014 9:39am
Round three lol im out
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  • #44,175
  • Jan 2, 2014 9:42am Jan 2, 2014 9:42am
Quoting 4tiger
Round three lol im out {image}
ooi. enough, no get too high.
谢谢了

have a nice time, but slowly hor no over leveraging.

regards
  • #44,176
  • Jan 2, 2014 12:54pm Jan 2, 2014 12:54pm
Quoting fti
{quote} fierce flower? wah!!! give me your car keys. wait i get my "daughter red".女兒紅 gan bei, shalom. http://www.youtube.com/watch?v=FSunmrtWZiE regards
if you have daughter she must be 千金.

it would be my honor to protect her!

ah... i'm drunk. but i am home safe
  • #44,177
  • Jan 2, 2014 4:37pm Jan 2, 2014 4:37pm
HAPPY NEW YEAR boss n friends
Wishing us all Good Health and Prosperity.
  • #44,178
  • Jan 2, 2014 11:21pm Jan 2, 2014 11:21pm
Not a good start...

stuck in AUD USD rescue.....


V
  • #44,179
  • Jan 3, 2014 12:23am Jan 3, 2014 12:23am
Quoting 4tiger
{quote} if you have daughter she must be 千金. it would be my honor to protect her! ah... i'm drunk. but i am home safe
lmao... and of course i was speaking in code for "thousand gold" (千金) meaning that if gold goes to 1000... and i would "protect" "her" from going below 1000... by going long.

what in the world is "daughter red" anyways, boss? might she be a car??

i think it's funny that (sometimes) people are more willing to act out and stuff in these 'anonymous' forums... but i am actually doing the opposite by trying to keep my posts under some control

Quoting indianguyinny24
Not a good start... stuck in AUD USD rescue..... V
oh-no! hmm.. maybe start it off slow? there's still an entire year ahead! good luck, man.
  • #44,180
  • Edited 2:22am Jan 3, 2014 1:16am | Edited 2:22am
Hello fti,

Happy New Year all !

May i ask a question please.

If a party eg.central bank or a big player , wants to devalue a currency, do they have to devalue the currency against every other currency ?
or do they just have to devalue against the core currency pairs and then the crosses will follow ?

Maybe an analogy to make myself clearer.
Lets say the bank of japan wants to devalue the yen.
Do they just sell the yen against the USD only (ie. buy the USDJPY core currency pair) ,
and the rest of the crosses (eg. GBPJPY / EURJPY / CHFJPY / CHFJPY etc) will automatically follow ?
Or does the boj have to actively sell the yen against every other counter currency to create yen devaluation across the board?

Any input or links to previous posts (which i might have missed) from any member would be most appreciated too...

Good Trading to all

Best Regards.
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