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View Full Version : Some advanced TA (that I'm skeptical about)



AMR
22-04-2008, 08:08 PM
Having used classical TA such as support and resistance, indicators, chart patterns, and recently candlesticks, I'm keen to dig deeper into the more advanced stuff but there are just some things I am skeptical about:

Elliot Wave: I can't see why there are X numbers of waves for each advance and decline.

Fibonacci: I find it hard to believe that the buying and selling behaviour of a market can be predicted by a pattern...at least with trendlines, chart patterns, and candlesticks there are clear psychological reasons.

Would followers of these techniques please enlighten me?

duncan macgregor
23-04-2008, 07:32 AM
AMR, A specialist is a person that learns more and more about less and less. Dont fall into the trap of looking for one simple solution to explain the behaviour of the masses. Sometimes common sense beats everything, there is no magic button to press that explains all. Its like baking a cake, you require a little bit of this or that, with a dash of something else. To be a great CHEF requires you to understand all the ingrediants. Macdunk

AMR
23-04-2008, 04:14 PM
Trix...I'll have to read up on that. I'm not that much of an indicator person, my style is more like Thomas Bulkowski's i.e I'm likely to enter a trade on a breakout above resistance or place a short after a support breaks. The only indicators I use are OBV and stochastics to detect volume and price acceleration divergences. I'll look into PSAR further, my usual trendline break as a stop loss is quite subjective and undisciplined at times. Do explain more about cycles, I havent done any trading based on that yet.

Money management is huge, in my early days I got a lot of winners. Unfortunately I cut the winners short...I had a short on RAK at 4.28...it got down to 2.00 at one stage. I had closed at 4.11 .:mad:.

And don't you worry Duncan, I still use fundamentals in my decision making for shares. I'll teach you about trend following indicators to compliment your 30 day EMA at the next Auckland meet :D:D.

axion
23-04-2008, 09:39 PM
You've got to wonder about how much self-fulfilling prophecy has on things like Fibonacci.

e.g. everyone knows you sell when it gets to somewhere on the Fibonacci extension, so when it gets there people sell, and then the SP does what it says it would do when it gets their because of the people selling.

[terms are probably wrong since I don't know much about TA]


Although, I guess you could say that about all of TA, e.g. people know a given candle setup is bullish, so people buy, and the people buying push the price up, which then affirms the idea it was a bullish setup, even though it only was because everyone thought it was. (or something like that, anyway)

AMR
14-05-2008, 08:52 PM
Yea I'd say a fair bit of TA is self-fulfilling prophecy as well, hence I might spend some time on Fib just to cover my bases.

Here's my next area of contention : Common moving averages (200 SMA, 30 EMA, etc) are supposed to be areas of support or resistance. Does anyone know of any authors or statisticians who have looked at this?

Steve
15-05-2008, 03:50 PM
Yea I'd say a fair bit of TA is self-fulfilling prophecy as well, hence I might spend some time on Fib just to cover my bases.

Here's my next area of contention : Common moving averages (200 SMA, 30 EMA, etc) are supposed to be areas of support or resistance. Does anyone know of any authors or statisticians who have looked at this?

I think that there have been articles in various TASC publications...