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     hilarius
Member
Username: hilarius
Post Number: 1434
Registered: 04-2004Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 01:03 pm: |  
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Good Afternoon
If your answer is Yes what is your favourite pattern?
Have you tested the results against any other patterns?
If your answer is No on what basis do you select and enter a position?
With Best Wishes
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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david_louisson
Member
Username: david_louisson
Post Number: 177
Registered: 02-2004Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 05:38 pm: |
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Hi Hilarius
I don't believe that any indicator or technique is conclusively predictive. Price movements are ostensibly random, and "anything" can happen.
Trend following systems make the assumption that the current trend is more likely to continue than not, i.e. that there is some kind of trending component among the randomness, that can be exploited. Whether that might be considered "predictive" depends on one's view of what "predictive" means.
Summation or averaging techniques (moving averages, weekly bars, Heikin-Ashi candles, etc) are lagging indicators.
Oscillators measure rates of change (momentum). Divergences point to trend deceleration, which may or may not lead to a reversal.
GMMAs, MACD and the like combine elements of both the above, giving them both lagging and "leading" aspects.
Elliott waves are supposedly predictive, but their helpfulness depends on being able to ascertain valid wave counts, which is IMHO a subjective process. Whatever, I haven't managed to master it. :-)
Volume, comparative strength, market breadth and FA bring independent variables (i.e. other than OHLC) into the mix, and like divergences, they can SOMETIMES point to trend reversals ahead of time.
Support and resistance lines, Fibonacci retracements, space-time projections, and astrological tools can point to future peaks and troughs. In that sense they may be "predictive", but IMHO their reliability is far from foolproof. Like everything else, sometimes they work well, sometimes not.
The challenge (or frustration?) is that, unlike casino games of chance, the probability of whether, or in what way, the past will repeat itself, can not be calculated in accurate mathematical terms. However, all of TA (or any kind of analysis) makes the underlying assumption that the trending component creates some kind of order amongst the chaos. If price movement was 100% random, then there would be exactly 50-50 chance of assessing future direction, analysis would fare no better than guesswork, and transaction costs would ultimately defeat any approach.
One could back-test a vast sample of price patterns to rate combinations of tools, as to how much better than 50-50 their "predictive" steer was, with statistical confidence supposedly being in some way proportional to sample size. But that offers no mathematical guarantee that the current trade(s) will follow these statistical rules.
You may also find the following thread helpful:
http://forum.incrediblecharts.com/messages/9/245800.html
Don't know how well I've answered your question - all of the above is widely known, I'm doing little more than regurgitate textbook material.
Anyway, wishing you and yours a Happy New Year, and prosperous trading in 2006
David
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vermante
Member
Username: vermante
Post Number: 528
Registered: 11-2002Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 06:31 pm: |
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Hi Hilarius
I believe you may have trouble distinguishing between risk taking and prediction when using T/A as a trading tool.
I prefer to use the term "Risk "rather than "Prediction" when assessing a trade.
By using the term risk I am aware that I am dealing with probabilities and consequently no trade is a guaranteed winner. Hence trading strategies are developed accordingly.
An illustrative example follows - :
Given the current economic conditions both local and global-At point A , I took a risk that the trend line would hold .
Cheers
Vermante
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tony_m
Member
Username: tony_m
Post Number: 511
Registered: 01-2003Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 07:31 pm: |
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Hilarius, I remember seeing a simple chart in a presentation which was unqualified but said something like 'an identified up trend is likely to continue 70% of the time and reverse about 20% of the time and go sideways about 10% of the time'.
There was no deep meaningful discussion about timeframes or anything else and it was presented by a private client portfolio manager describing the investment methodology they used but it was based on their historical statistics over years of trading.
One can argue all day about 'predictive' but in my mind identifying a trend by whatever means one likes to choose does have a predictive or probability driven outcome and some simple and crude tests might demonstrate this.
For example in the past month, of the 1589 trading stocks on the ASX, 703 (45%) went up, 743 (47%) went down and 122 (8%) went sideways. Using a pin to choose, one roughly had less than a 50% chance of making a portfolio profit over that period.
I ran my weekly trend based buy scan which selects stocks in strong uptrends based on quantitative and qualitative analysis of MA's and a trend strength indicator. Other selection criteria include TMF and turnover and if the price action meets the buy criteria, but of course no FA or objective or eyeball chart analysis has been done but good enough for a simple test. These would be the candidate stocks from which my final selections would normally be made.
The date was set back one month for the scan and 52 stocks from the entire ASX qualified. I checked those stocks today and the results are 34 (65%) up, 14 (27%) down and 4 (8%) unchanged. No further TA, money or loss management was applied.
Interestingly, not too different from the 70% continuation figure quoted by the portfolio manager. Now before all of the statisticians and others blow a gasket I understand it is a crude test but it does suggest that there is some basis for assuming the probability of an outcome which is likely to be better than random selection....Tony_M
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davkell
Member
Username: davkell
Post Number: 321
Registered: 07-2004Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 08:58 pm: |
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Tony M;
based on quantitative and qualitative analysis of MA's.... Please excuse my naivety, but could you explain what you mean by quantitative and qualitative analysis ?
Just curious.
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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stoian
Member
Username: stoian
Post Number: 224
Registered: 03-2004Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 09:58 pm: |
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To Hilarius, Vermante, David-Louisson, Tony M and many others,
First of all, allow me to wish you ALL, also to Colin and his Team, A VERY HAPPY NEW YEAR.
Please, allow me also an answer to this topic=question opened by Hilarius:
Not any patterns can have a predictive value, BECAUSE OF THE CHART TYPE.
I have told you already, and i am also repeating yet (only to INCITE YOU TO OPEN - besides your INBORN PAIR OF EYES - the another pair of eyes, called THE EYES OF YOUR MIND, which are not inborn, but you can to obtain them ONLY through a TRUE EDUCATION=LEARNING=TEACHING, because not ANY EDUCATION means compulsory LEARNING=TEACHING, but is mostly calling PROGRAMMING A HUMAN CLONE=TO WRITE THE CODE=A SCRIPT FOR THE FUNCTIONING OF YOUR BRAIN.
Please, try to ask for yourselves after your SINGLE ONE LIFE EXPERIENCE during for each of us X years, how fast are the HUMAN RULES=EDUCATION=LAWS OF "TEACHING" changing, so that the for ever result can be only one: YOU WILL NEVER KNOW SOMETHING FOR EVER TRUE) that BEHIND ANY ORDINARY=PROFANE CHART, it gives A TRUE CHART CALLED THE PROBABILITY FIELD OF GAUSS.
Therefore, ONLY THE PATTERNS GIVEN THROUGH THIS TYPE OF A CHART=THE SINGLE TRUE ONE (because of his LEVELS OF PROBABILITIES=LEVELS OF LIKELIHOODS, once for the evolution=dispersion of the MEAN IN TIME of your researched=analysed phaenomena=evolution IN FRONT=IN COMPARISON WITH THE EVOLUTION IN TIME OF THE REAL=TRUE MEAN, and twice, also for the evolution of THE INDIVIDUAL OR LOCALISED=DISPERSED VALUES FROM THEIR MEAN IN TIME) CAN GIVE YOU A TRUE PREDICTIVE=THE MOST PROBABLE VALUE (but completely and correctly said because of THE PERMANENT=IN INFINITE TIME MANIFESTED RISK=VOLATILITY FOR THE EVERY PRESENT=CURRENT TIME: the very probable INTERVAL=SET of VALUES, made from and between THE SUPPORT VALUES=LINE=CURVE and THE RESISTENCE VALUES=LINE=CURVE) THAT YOU NEED INDEED, AND NOT THE TREMENDOUS INFORMATIONAL BALLAST TO BE OBTAINED THROUGH YOUR GUESS-WORK, USING A TREMENDOUS VOLUME OF INDICATORS, GIVEN BY THE TECHNICAL ANALYSE, WHICH IS NOTHING ELSE AS A FALSE WAY=PROCEDURE=EDUCATION, FOR PROGRAMMING YOUR BRAIN AND EYES WORKING ON IT, WITH IT AND FOR IT, WITH NO GOOD (the expected) RESULTS.
Regards,
Doru Stoian
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tony_m
Member
Username: tony_m
Post Number: 513
Registered: 01-2003Rating: 
Votes: 1
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| | Thursday, December 29, 2005 - 10:22 pm: |
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Davkell, I actually said 'MA's and a trend strength indicator'. I check for trend strength using ROAR and ADX/DI values. With ROAR I check for the value (quantity), likewise with ADX/DI I threshold the values of ADX and +DI and also the behaviour of ADX in several value bands depending upon whether ADX is above or below +25 or above 30 and whether it is rising or falling in these different bands. Helps to identify emerging and existing trend behaviour.
I can test the MA bands qualitatively for what I call 'droop', i.e. is the slow MA band widening or narrowing over several time periods. If the slow MA band is narrowing or beginning to droop I filter these stocks out of the list of candidates.
That is what I mean by qualitative and quantitative.....Tony_M
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captain_chaza
Member
Username: captain_chaza
Post Number: 1570
Registered: 02-2003Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 10:24 pm: |
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Sorry DS
Are you saying a share can either go North or South
or even stay where it is and frustrate everyone?????
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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davkell
Member
Username: davkell
Post Number: 322
Registered: 07-2004Rating: N/A
Votes: 0
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| | Thursday, December 29, 2005 - 11:03 pm: |
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Thanks for the clarification Tony. Your system sounds very similar to mine, of which with new refinements (and a lot more study) seems to be doing well.
I'll be looking into this ROAR though.
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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stoian
Member
Username: stoian
Post Number: 225
Registered: 03-2004Rating: N/A
Votes: 0
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| | Friday, December 30, 2005 - 12:23 am: |
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Dear Captain Chaza,
What i want to tell you all, have the same meaning like Davkell`s quote about one of the very meaningful sayings of Donald Trump: "Manage the downside; the upside will take care of itself"
Therefore, in my past post for you, i have already translated for you=ANTICIPATED what Donald Trump have even said: Take care - FIRST OF ALL - about the South=downwards movements=downwards motions for the TREND (if it`s giving some INDEED OR NOT, for the medium to long term only, because ONLY THIS LEVEL IS SHOWING AND GIVING YOU A REAL=TRUE OPPORTUNITY=SIGN TO BUY=TO MANAGE YOUR FINANCIAL RESOURCES AT THE CHEAPEST WAY POSSIBLE) because the North=upwards movements=upwards motions for both: TREND (an evolution for medium to long term) or TENDENCIES (an evolution for short or very short term) will ALREADY mean for you NOT ONLY AN OPPORTUNITY FOR IMAGINATING A PRICE LEVEL FOR YOUR SELL, BUT YOU COULD AND WILL (only after you buy) TO TRANSFORM ONE OF THIS NORTHERNER LEVELS EVEN IN A CERTAINTY=TO HALLMARK YOUR WINS=PROFITS after wish=as desired. Without any acquisition YOU WILL ONLY LIVE A DREAM ABOUT WINS=PROFITS AND NOT LIVE A CERTAINTY.
Again, a happy new year for all
Doru Stoian
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ingot54
Member
Username: ingot54
Post Number: 1027
Registered: 05-2004Rating: 
Votes: 1
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| | Friday, December 30, 2005 - 01:11 am: |
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Hello Hilarius
Good Afternoon
If your answer is Yes what is your favourite pattern?
Have you tested the results against any other patterns?
If your answer is No on what basis do you select and enter a position?
With Best Wishes
Hilarius
If an uptrend is a pattern, then my answer is "Yes"! My selection and entry methods are boringly simple - hardly worth posting, because this is such common knowledge now, for long trades.
SELECTION
First get the FA right - EPS must be increasing over the past few 6 monthly reports, and debt levels must be static or falling.
Then get the TA right. Market direction, Sector direction, Stock direction. Liquidity/volume must be tradable.
That's it - nothing to add to that. The rest is just refinement of it.
Just scan through and find the strongest stocks that qualify. (Of course there are add-ons which do this better, but good old eyesight will also serve you well).
ENTRY
Enter on a pull-back/retracement. Will not elaborate, as there are many ways to manage an entry on retracement. Snifter is famous for such entries, and the placing of buy-stops.
Much of the conjecture arises because :
a) We are constantly searching for an edge
b) We think someone else is doing better than we are
c) We are curious
d) We don't like the simple approach (How could that work?)
e) WE DON'T LIKE TO BE TOLD WHAT TO DO
(Love the red ink!)
While there is nothing wrong with curiosity and research, so far it has not been shown that the approach of Stevo, Tony_M, Snifter and probably heaps more on this forum, has been surpassed.
Yet second-guessing the market still goes on.
In my short time mucking around with trading, I have yet to see a pattern that is superior to an uptrend!
Deanrosario has always maintained "Trade what you see" and if you haven't found something to trade, just have a look at this one. Actually, I'm a bit amazed that it has not attracted more comment. It's been a bullet.
If you claim to be a trader, and haven't traded ZFX in the past 4 months, I'd be a bit concerned about exactly what it is you are looking for in the markets.
My comments are directed to the forum, not you personally, Hilarius. I'm having a grump day - too much "I wonder what the markets will do" stuff lately.
While I also participate in speculation about market direction, I certainly do not base my selection and entry on that speculation - purely on the method I mentioned above. The only indicator I use now is the 30-day MA - just to check my eyesight is still ok on trend!
When we all realise that we have to become astute Risk Managers, and that what happens after entry is the management of the trade, then there is a chance of turning a profit.
My method is just an edge - a good one. Trade management is another issue, best referred to other threads. My record is not too strong on that.
Keep Smiling
Trading style :Short Term and CFD's predominantly
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stoian
Member
Username: stoian
Post Number: 226
Registered: 03-2004Rating: N/A
Votes: 0
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| | Friday, December 30, 2005 - 01:24 am: |
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Captain Chaza,
And not forget what Donald Trump was not telling you till yet, but i do: Both, the MOST PROBABLE DOWNSIDE, or the SOUTH you mean, or the downwards motion i mean, and the MOST PROBABLE UPSIDE, or the NORTH you mean, or the upwards motion i mean, COULD BE SEEN ONLY ON A GAUSSIAN PROBABILITY FIELD=CHART, and not on any ordinary chart build with the TREMENDOUS INFORMATIONAL BALLAST OF INDICATORS GIVEN BY THE TECHNICAL ANALYSE.
And, after all this stuff, be never frustrate about CONSOLIDATION "IN TIME", OR BETTER SAID: INSIDE OF THE GAUSSIAN PROBABILITY FIELD ON A CERTAIN LEVEL, because don`t last TOO long, because A MARKET WITHOUT A PERMANENT PULSE (the downwards and upwards movements at least for short to very short term) WERE A DEAD MARKET INDEED.
Do you want to act=play on such a market?
Beleve not. Will be too tedious (dull), and a more important aspect, IS NOT A PROFITABLE MARKET.
Therefore, you have TO SHAKE THE CROWD=THE HERD OF INVESTORS ( to do the whip-poor-wil) AS WELL AS POSSIBLE to MILK them OUT. If you don`t participate, than someone else will do this in your place/against your benefits.
Happy Holidays again,
Doru Stoian
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stoian
Member
Username: stoian
Post Number: 227
Registered: 03-2004 | |
