Chart Scaling, The Great Lie of Technical Analysis, Must Watch | Forex Factory

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Chart Scaling, The Great Lie of Technical Analysis, Must Watch

  • #1
  • First Post: Mar 20, 2016 1:57pm Mar 20, 2016 1:57pm
Hi folks

I came across this video on youtube about technical analysis and why it is costing you a fortune.

The video address a little known function about charts and indicators called "scaling"

Scaling is one of the greatest lies ever perpetrated on retail traders.

I hope you enjoy the video and pay it forward to as many traders as you can find. It's good karma for you.

Inserted Video
  • #2
  • Edited 5:03pm Mar 20, 2016 3:17pm | Edited 5:03pm
Quoting Gobigfx
Hi folks I came across this video on youtube about technical analysis and why it is costing you a fortune. The video address a little known function about charts and indicators called "scaling" Scaling is one of the greatest lies ever perpetrated on retail traders. I hope you enjoy the video and pay it forward to as many traders as you can find. It's good karma for you. https://www.youtube.com/watch?v=igDSdVqBbjQ
He doesn't make sense...... he says "algorithmic scaling"... but I think he means "logarithmic scaling", which is actually nothing like the default on MT4 or any other typical charting package... and the supposed "algorithmic scaling" causes all technical tools including price, to repaint?? seriously... I smell crap... lots of senseless crap... with a sales pitch attached...

Is he saying that if I take a screen shot of my live tools at the current price on Monday morning when the market is moving(BB, moving averages, candle sticks) and then at the end of the week compare the positions and patterns they make to the historical chart, that they would look different???

Really??? he wants me to believe that? Seems like an excuse to not work on whats important(discipline/psych/emotion control) and just pay him money and use my time to learn his "secrets"... thanks for sharing but sorry no thanks...
  • #3
  • Mar 20, 2016 4:14pm Mar 20, 2016 4:14pm
Can someone explain what scaling means? I do not want to watch the whole video
Price-Action Extremist
  • #4
  • Mar 20, 2016 5:13pm Mar 20, 2016 5:13pm
Quoting bagman
Can someone explain what scaling means? I do not want to watch the whole video
Short explanation:

http://stockcharts.com/articles/mail...tic-chart.html
It never gets easier, you just get better
  • #5
  • Mar 20, 2016 5:27pm Mar 20, 2016 5:27pm
Quoting Shabs19
{quote} Short explanation: http://stockcharts.com/articles/mail...tic-chart.html
Thanks for the explanation. What is the guy in the video actually getting at?
Price-Action Extremist
  • #6
  • Mar 20, 2016 5:34pm Mar 20, 2016 5:34pm
Quoting fighterdude
{quote} He doesn't make sense...... he says "algorithmic scaling"... but I think he means "logarithmic scaling", which is actually nothing like the default on MT4 or any other typical charting package... and the supposed "algorithmic scaling" causes all technical tools including price, to repaint?? seriously... I smell crap... lots of senseless crap... with a sales pitch attached... Is he saying that if I take a screen shot of my live tools at the current price on Monday morning when the market is moving(BB, moving averages, candle sticks) and then...
You are correct it is logarithmic scaling he is referring to but it does not defer the fact that every indicator is form fitting to make charts look good after the fact.
  • #7
  • Mar 20, 2016 5:36pm Mar 20, 2016 5:36pm
He's providing this information like its some top-secret he discovered. A little bit of logical thinking should come a long way.
Also, its not the chart scaling that is preventing you to profit in this game. That would be ridiculous.

Most want an easy way to backtest. They achieve this by simply eyeballing previous setups, taking statistical hypothesis for granted.. Wishful thinking and laziness are far outweighing the cons of chart scaling.
  • #8
  • Mar 20, 2016 5:36pm Mar 20, 2016 5:36pm
Quoting bagman
{quote} Thanks for the explanation. What is the guy in the video actually getting at?


He is saying that charts are form fitting to look good so that technical analysis "looks" like it actually works when in fact its impossible to see the future and therefor all technical analysis is really good for is looking at the past in a vacuum and therefor completely useless.
  • #9
  • Mar 20, 2016 7:02pm Mar 20, 2016 7:02pm
lol he actin' like he never heard of forward testing though. besides, the indicators will form fit on a backtest whether the chart is scale fixed 1:1 or not, making the video a propaganda piece to get custies
  • #10
  • Mar 21, 2016 5:27am Mar 21, 2016 5:27am
The only time the logarithmic charts are worth looking at, is over very long term charts, looking at historical data across many years or decades.
For timeframes used by MT4, there is no real noticeable difference between log or arithmatic charting scale.
It never gets easier, you just get better
  • #11
  • Mar 21, 2016 8:40am Mar 21, 2016 8:40am
People who make consistent $$ using TA are disproving OP
To name few
Pips92 Griffinsoul Likica Omonisha CNTtrader MrPips Emmanual list goes on and on.
Art of trading requires more then simply looking at MA crossovers or BB bands.Its the art of reading Price action correctly.
In trading, you have to be defensive and aggressive at the same time
  • #12
  • Mar 21, 2016 9:22am Mar 21, 2016 9:22am
The video maker says that when you are trading "in the moment" ( before a market move) the charts are not fully revealing the "technical setup". Only after the move happened you tend to see that there was indeed a technical setup and on which you did not react.​
I can vouch for that. It is true . The technicalpattern is much clearer after the market have moved. There are many such examples.
Just my 2 cents...
Never Ever Give Up!
  • #13
  • Mar 21, 2016 9:28am Mar 21, 2016 9:28am
Quoting Gobigfx
Hi folks I came across this video on youtube about technical analysis and why it is costing you a fortune. The video address a little known function about charts and indicators called "scaling" Scaling is one of the greatest lies ever perpetrated on retail traders. I hope you enjoy the video and pay it forward to as many traders as you can find. It's good karma for you. https://www.youtube.com/watch?v=igDSdVqBbjQ
God bless him. BB and MA. Learn price action, bar by bar.
If you are good at something, never do it for free--Joker
  • #14
  • Mar 21, 2016 9:30am Mar 21, 2016 9:30am
Quoting Cobra
The video maker says that when you are trading "in the moment" ( before a market move) the charts are not fully revealing the "technical setup". Only after the move happened you tend to see that there was indeed a technical setup and on which you did not react.​ I can vouch for that. It is true . The technicalpattern is much clearer after the market have moved. There are many such examples. Just my 2 cents...
You realize that it could go the other way and it would look like valid pattern too? For me patterns need fundamental justification. In trends what looks like revelsal signal most of the times is just small pullback. When you have fundamentals on your side and use technicals a lot of the time you can enter trade to the pip. And this chart scaling bullshit? I guess it's problematic if you use only one timeframe but then you have a lot of bigger problems.
  • #15
  • Edited 12:31pm Mar 21, 2016 11:57am | Edited 12:31pm
Quoting Gobigfx
{quote} You are correct it is logarithmic scaling he is referring to but it does not defer the fact that every indicator is form fitting to make charts look good after the fact.
These indicators are lagging indicators (also referred to as period or lag), meaning, that any indicator value is calculated from past (i.e. price) values. As long as they are not repainting they are good (not fitting).

So, his point is.. he has no point. This guy is so totally clueless it is a shame.
Return To Disorder
  • #16
  • Edited 8:46pm Mar 21, 2016 11:59am | Edited 8:46pm
Depending on how traders use it, certain forms of TA (indicators, chart patterns) may not be overly helpful, but the rationale used in the video -- specifically, the claim that BBs and MAs change themselves retrospectively to fit future data (e.g. at 10:40 "if the future was way down here, the BBs at this point in time wouldn't look like this") -- is seriously flawed. These indicator values are derived from past OHLC data only, and they don't repaint. As a read of babypips' school will tell you.

So what do we have? A vendor who knows very little about technical indicators, despite claiming to be a 30 year veteran, caught out making embarrassing errors (even the title of his video is grammatically incorrect), while shamelessly promoting yet another educational offering. Like fighterdude says, thanks but no thanks.

@Gobigfx: the material in the video has nothing to do with logarithmic scaling. By "algorithmic" scaling the presenter means that MT4 charts re-scale themselves automatically so that the price data being plotted always fits inside the main chart window. At least he got that part right.

Sure, TA has its limitations, but these have nothing to do with forward-looking chart scaling. Rather, TA is ineffectual to whatever extent it fails to establish directional or behavioral biases in future price movement. EAs use TA, and they merely crunch numbers; to them, any kind of chart scaling is irrelevant.
  • #17
  • Mar 21, 2016 12:12pm Mar 21, 2016 12:12pm
Quoting hanover
Depending on how traders use it, certain forms of TA (indicators, chart patterns) may not be overly helpful, but the rationale used in the video -- specifically, the claim that BBs and MAs change themselves retrospectively to fit future data (e.g. at 10:40 "if the future was way down here, the BBs at this point in time wouldn't look like this") -- is seriously flawed. These indicator values are derived from past OHLC data only, and they don't repaint. As a read of babypips' school will tell you. So what do we have? A vendor who knows very little...
agree 100%
Everyone knows charts are history.Period!challenge is profiting from it.People who succeed are obviously putting lot of effort and others are under different delusional state.
I got a PM guy telling me he placed sell on EU before the Feds data release
Really? Obviously this guy is fundamentally clueless when all the pundits were writing articles that Feds won't raise in March and that was obvious considering global weak economies and oil plunge.
Trader should be aware what he is trading!
regards
In trading, you have to be defensive and aggressive at the same time
  • #18
  • Mar 21, 2016 1:24pm Mar 21, 2016 1:24pm
Quoting rockit
{quote} These indicators are lagging indicators (also referred to as period or lag), meaning, that any indicator value is calculated from past (i.e. price) values. As long as they are not repainting they are good (not fitting). So, his point is.. he has no point. This guy is so totally clueless it is a shame.

This "guy" is one of the top prop traders in the world right now trading 25 million at his firm. So Clueless he is not lol
  • #19
  • Mar 21, 2016 2:41pm Mar 21, 2016 2:41pm
Quoting Gobigfx
This "guy" is one of the top prop traders in the world right now trading 25 million at his firm. So Clueless he is not lol
Me know you're even smarter than him! *ggg* No, seriously, guy is talking BS all the way, get over it.
Return To Disorder
  • #20
  • Mar 21, 2016 2:52pm Mar 21, 2016 2:52pm
It still amazes me that you retail guys (who do nothing but lose and lose and lose) keep holding to your Technical anlysis beliefs so firmly.

As an institutional trader there are times I actually feel guilty about taking your money but then I see how stupid you all are and that feeling of guilt goes away.

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