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Why does Technical Analysis work?

Chart Forum » Does Technical Analysis Really Work? » Why does Technical Analysis work?

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mosaic1996
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Thursday, April 05, 2007 - 05:16 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I know that Technical Analysis works in the sense that it can give reasonably reliable indications that a stock is more likely to move up than down (or vice versa). In other words, systems with relatively high win loss ratio (say 60% to 90%?).

This is distinct from TA approaches that rely more heavily on stop-loss/money management aspects to make a system profitable. In other words, systems with a lower win-loss ratio (say 40% to 60%).

So my question is, why/how does TA reveal opportunities that have a relatively high probability of producing a profit?

Cheers,
Mosaic


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hilarius
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Stop Losses and Money Management are not part of TA

They can be used and are used by people who select with fundamental analysis or FA+TA

Hilarius







I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

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hilarius
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TA works for the same reason that Pavlov's dog got fed when he (the dog) learned to ring the bell

He (the dog) got fed when he learned a particular action was related to a particular reward

Books have been published giving the probability of a future reward in the form of a price rise following various patterns on charts

If enough rewards result from trades based on the repetitive recognition of chart patterns it is reasonable to accept their predictive value ... otherwise it is not reasonable to rely on charts alone

[As we have discussed before I make no distinction between "probability" and "predictability". They are one and the same and I infer no greater probability to a prediction than I do to a probability. They are interchangeable terms with identical meaning]

In short if a reward follows often enough from a given chart pattern ... why not repeat the ringing of the bell i.e. the entry into the stock?

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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mosaic1996
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Hilarius,

I was really looking for a discussion on
* what causes the patterns to form

Cheers,
Mosaic


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hilarius
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Saturday, April 07, 2007 - 03:39 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Mosaic

That is a most interesting question

I have been trying to recall which of the patterns were found to be the most reliable (an expensive book which I do not own by Bulkowski has provided data)

As I recall one of the most reliable (after eliminating a small number of false breakouts) is the move out of a rectangular consolidation

What is said to be depicted in the pattern as it forms is a contest of wills between bulls driving the price up and bears driving the the price down, creating a ranging consolidation pattern within upper and lower limits which neither are prepared to breach, perhaps because of fear of the other group

When a decisive move away from the consolidation occurs many others perceive that the war of wills has been decided and the inactive observers then become active participants in the resulting price trend

A similar battle of wills can be seen in ascending and descending triangles

I suppose the deeper question is what motivates anyone to buy anything and what networks if any operate between players during periods of consolidation and breakout

It would be interesting to catalogue every secret thought of every market participant and their tolerance to price falls and rises

I suspect that even if we could wire the brains of all participants to a central computer we might still have difficulty in monitoring the resulting behaviour patterns or even describing them

Some scientists at the Santa Fe Institute were given the task of analysing the causes of major events, from avalanches to weather events to economic collapses to political collapses such as the end of Apartheid and the Iron Curtain

They then received funding to model the entire world financial system ... and from there I believe the project moved in house to one of the larger investment institutions

Now they all are modelling markets and have their algorithmic models from which they are said to be making billions

Could the collective skills of IC members model THE CAUSES of price patterns? Or would this be merely re-inventing the wheel?

If patterns work do we need to know why they work?

I confess I don't know why the patterns form ... other than speculating about the competing behaviour of bears and bulls and their quest for certainty in uncertain markets ... trends then become patterns to follow and the blind perhaps follow the blind by copying the behaviour of others (momentum trading) ... so creating trend patterns where none previously existed

(I agree that it would be interesting to know how and why patterns work ... but is the science of discovering how and why they work accessible? I don't know that the science exists ... if it did we might be able to predict the formation of a pattern before it started and that would be an awesome trading edge.)

Remembering One Tel and HIH perhaps the key words are greed and fear ... but the precise measurement of greed and fear in patterns will I suspect remain a mystery revealed only as major trend changes happen

Clearly though greed and fear do distort underlying fair value, available from fundamental analysis

In the longer term I like Weinstein's stages which depict (1) Preparation (2) Creative Energy and Growth (3) Consolidation and Maturity (4) Competitive Deterioration

These are patterns which were seen in the assumption of power from the Greeks to the Romans, the expansion of the Roman Empire, a period of apparent dominance, and then the Decline and Fall. These patterns are seen in miniature in the creation, growth, maturity and decline of most human enterprises.

The one exception to this rule is the Church, against which we are assured the gates of hell will not prevail

Perhaps then prayer is a means to discovering truth?

You could of course reply, in the words of Pontius Pilate, "Truth, what is truth?"

That is a good question, to which I have a suggested answer but far be it from me to introduce spirituality into this materially driven Forum

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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msparks
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Saturday, April 07, 2007 - 04:19 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Try the placebo effect.
I tell you a pattern means this so you act accordingly.

This happens because there are hundreds of ta guru's looking for the pattern and know the probability of each one.

It is a pattern of human psycology.

http://www.marketscreen.com/help/chartpatterns/default.asp?hideHF=&Num=110

or look at candles and the psycology associated with candle patterns



What does Easter mean anyhow ?
Someone told me the eggs represent new life, re birth, but bunny rabbits don't lay eggs, chooks lay eggs.
Go Figure, who thought this up anyhow ?


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hilarius
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Just another placebo effect :-

"The bunny was first used as a symbol of Easter in 16th century Germany, where it was first mentioned in German writings. The first edible Easter bunnies, made primarily of pastry and sugar, were produced in Germany as well, during the early 1800s. Also in Germany, children made nests of grass and placed them in their yards. They believed the Easter Bunny would fill these baskets with brightly decorated eggs during the night."

We can also thank Germany for the St Matthew Passion and the St John Passion of Johann Sebastian Bach

Take your pick :-)

Perhaps we could persuade the shopping centres to play the works of Bach, and donate the profits from the sale of Easter Eggs to the needy of the world?

And possibly pigs might fly

Hilarius


I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

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eric
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Hilarius, I agree with you about Weinstein's "pattern" of the 4 stages. And indeed these 4 stages have been a force in our history all along. As a matter of fact, they are also a psychological force in our life. Look at marriage p. ex.

Preparation could well be courtship. Many courtships do not go beyond this stage, as does Weinstein's Stage 1. Some charts stay in there for a very long time.

Creative Energy and Growth commences when we are entering marriage with all our good intentions and promises. Does not a stock in Stage 2 give us this feeling of joy and hope? Some, as in marriage, are in Stage 2 for a very long time. Some wither quickly.

Consolidation and maturity is a very interesting stage, both in marriage and with stocks. Sometimes this stage last for a very long time, indeed in marriage, forever (or at leasts as long as we last). For some it is a very short stage, boredom sets in and we enter the stage of decline. Stock retreats, marriage gets boring and dies a slow and lonely death. Well, c'est la vie.

One really can relate these stages to anything in life.

And what is truth? Well, your truth may well be different to my truth, and our truth may be different to everybody else's truth. In the end, I believe, the only truth is the one that is buried in the deepest laws of nature, which probably no human being has really discovered.

For what it is worth.

And by the way, Weinstein'r 4 Stages have been my trading bible for a very long time, with much success. Thank you Mr Weinstein, this year you are sending me to Thailand for 3 months.

Eric


Time frame: as long as it takes

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holycow
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Saturday, April 07, 2007 - 07:09 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Mosaic,

Let me try...

1) What cause patterns to form? My own conclusion is they are due to a combination of factors: a) supply and demand of shares, b) stock investors/traders reaction of the stock fundamentals and price, manifested by a combination of human greed and fear - greed for profit, fear of missing out, fear of losing money, etc

2) Stock price may go up or down, fundamentals may change with time, human basic emotion of greed and fear doesn't change and hence chart pattern repeats itself when a "similar" market condition appears although the stock price may be different (higher or lower).

3) Some of the market cliche probably reflects what is behind the chart patterns... for example: a) price has memory - this forms the basis of support and resistance "concept", b) price falls on its own weight - as a result of profit taking, c) the trend is your friend - trade with the trend and not against it (true up to a point), etc...

4) A generalised equation: stock price movement = stock fundamentals + stock/market sentiment. Many use FA to attempt to understand stock fundamentals, this tends to be logical and maths oriented. TA/chart patterns are used to study the sentiment or the psychological part of the equation. Both FA and TA work but they have to be applied in the "correct" way, ie, say, in terms of timing (or Weinstein's various stages), in temrs of the big picture view as the background/foundation behind certain market/stock movement from fundamental angle.

There's no reason why FA and TA cannot be applied together, but to do it correctly and properly require a great deal more discipline and a broadbase understanding of big picture issues and interplay of human psychology (greed and fear factors).

5) Referring to the attached charts: JHX and BLD. They are chosen because of a) they are in the same group, so they can provide us a view of how the market view the group as well as how each stock fundamental influenes their individual stock price.

6) The chart on the left is the daily chart of JHX, starting from the top...

6.1) pt "0" - shows a H&S formation, why it forms? As a result of human reaction to greed and fear - the first time when the stock price reaches a new high, profit takers set in and took their profit - fundamentally their exit of the market may be due to JHX's court case, could be due to the US building industry slumping, etc. Emotionally, it could be a simple case of they are looking at a lot of profit sitting on the table, they just want to lock it in for fear of losing it (some of them may have bought in as low as 5.50 or 6.0.

The stock price rebounded higher as a result of those who had missed out the in the recent new high, jumped in and grabbed their lots. These people were driven by greed and a strong belief of a bullish market and in this stock.

6.2) The stock price rebounded higher, but the same people who sold out in the first spike were not done, they took more profit, and as a result the price dropped, back to the previous support. This time, the same group of buyers moved in, may be with a few more less experienced speculators, they bought the lots thinking that since it worked the first time, why not the second?

6.3) The stock price had a quick rebound but were quickly sold down, this time, the more experienced traders and the "big profit takers" behind the recent sell down knew the game was up and many exited the stock as shown by the sudden increased in volume - pt "1". (note: they could only milk the market that much for that long...).

7) pt "2" shows the effect of "price has memory". It also shows why support and resistance exist and work - because most people when come to buying and selling their stock, they think in terms of profit/loss and not just stock price or just number of shares. They remember how much and when they bought and they will be thinking in terms of how much loss or profit they are taking if they were to sell the stock - this has the effect of making them to: a) not selling (if there's a loss), b) buying more (the perception of "cheap" price since that's the reason why they bought in the first place).

The support line "s1" illustrates this very well - at 8.15 there are quite a few people who are thinking it's either quite cheap or quite expensive to buy/sell. This level has a "psychological" impact to those who own this stock - it's "the line drawn in the sand" - if the price crosses this line, they will sell and hence it is necessary for the "bulls" to hold tight or see the price collapses after this level. (The overall shape of a H&S on the right hand side doesn't bode well for the price to hold as H&S pattern is a reflection of people are beginning to "see" the stock as not that good a stock to hold as a result of price deterioration in the last two months. These folks are worrying and the fear is driving them having second thought of holding on.

8) pt "3" shows another support level @7.30

9) pt "4" shows a "base"/double top/triple top/double bottom/rectangle had been made. The "SS" support was holding. The pattern description is not important. What is important is the stock price doesn't fall through support anymore( hence a base). This is saying the selling has stopped. It also says the stock price at 6.50 is
"really cheap" - bottom pickers began their basement bargain hunting. And the price bounced since there were more buyers than sellers - the supply and demand of shares has a net effect of pushing up the stock price here.

10) The "up cycle" began with resistance level taken out due to buying outstripping selling (Demand greater than supply, a stock price needs (sustained) buying to move up). Pt "6" shows a triangle being formed and there was a "breakout". Not suprisingly the triangle happened near 8.15 since that price level has a strong psychological impact on the stock holders. The bulls and bears had a fight here as shown by the triangle - a pattern reflecting an indecisive crowd - the bulls wanted to push higher but the bears (those who missed out selling when the price was coming down) wanted to get out of this "loser". Eventually the bulls won as the "breakout" shows the buying took out all the sellers.

11) At pt "7", history repeats itself one more time - the price has memory - this time, those people who got "hurt" in the previous selldown had learned their lesson. They were not hanging around to wait and see, the moment the price touches 10.00, many considered the number "ten" as their lucky number and they promptly exited the stock. History again repeated as shown by the double top made near 10.00 - this time most people learned well from their H&S lesson. There's no time for the crowd to form a H&S - they learn their lesson of not holding on in two lessons as in double top instead of three as in H&S (well done!)

12) The price collapsed after the double top and now it is sitting on "s1" - that strong psychological level again - the bulls and bears are again slugging it out. If the bears win, the price will drop lower, possibly to test the support at "SS". If the bulls win, the price may bounce from here and test a high of 9.50 but... looking at it from a fundamental angle, with the weak US property market and the generally poorly performing building sector, if I were to draw a conclusion here, it has to be "bad news". In terms of risk/reward in this stock, I think it doesn't stack up, at best it's about 50/50, but with a poor Fa view, I think I would rate it as 70/30.

I am actually shorting this stock just in case anyone asks.

13) This post has got out of hand... I will stop here. As an exercise, draw your own conclusion in BLD. Some of the points worth considering are: a) BLD's price pattern and the frequent more "violent" price spikes, b) BLD's business and its geographical business distribution - the impact of the local building sector and the impact of the US building sector, c) other FA considerations.

14) ps: please excuse the lousy spelling and poor grammar - too darn lazy at this point to correct them.

15) Happy Easter Everyone.

JHX/BLD Daily



HC

"According to some, reading and believing in what I have written can lead you down the road of misery, hence you are advised to eat more vegetables and drink plenty of water, or you'll end up with a big bad case of constipation..."

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msparks
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HC
Happy Easter
Would it be possible to drop those charts in individually, bit small to see the points and wouldn't want to waste all that analysis due to poor eyesight.

Cheers
JHX was interesting because with all the talk of asbestos etc and court case and tax implications, and management bonus's the price just kept going up.

Re BLD, have you got any theory on why the GAP can be such a strong "stop" for a chart as with the BLD chart.
I find it amazing that a gap can have so much "power" over price action, it happens all the time, or a lot anyhow.
Anyone listening to the news would have thought the company was in the doldrums yet the price kept increasing.
Seems the profits too good for any negative press , and the press think they control the world.


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holycow
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JHX Daily


BLD Daily


1) BLD, the gap @9.0 seems like a good place to take profit, but if you look a little to the left, you can see there's a fair amount of resistance immediately above 9.00. In any case, if you are a trader and when you see the stock price kind of stuck at 9 and is not moving higher and then the SSE meltdown hit the global market, it's quite natural for the trader to take their profit and exit the stock.

2) The frequent price spikes in BLD I believe indicates this stock has a lot of trading activities going on esp before/near divy time. Sometimes it's important to distinguish the difference between free floats and the total number of share being held by the long term investment funds. Frequent sizeable fluctuations are the work of the (big) traders. My assumption here, the instos don't normally trade their stocks other than loaning them out to the shorties or writing warrants with their holdings. (I am however quite open to the argument that this assumption could be wrong).

3) This stock has the tendency to form H&S pattern, so the latest H&S may not "play" out as anticipated.


HC

"According to some, reading and believing in what I have written can lead you down the road of misery, hence you are advised to eat more vegetables and drink plenty of water, or you'll end up with a big bad case of constipation..."

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holycow
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TEN Daily



1) Here's a test to see if TA works...

2) FA angle: a) media law changes, TEN is looking for a new owner, it's not doing well financially in the last quarters or two, analysts are saying it's too expensive at the current price... and blah blah blah and a lot more other FA stories. So far there's no buyer making any sort of offer.

3) TA wise, the stock seems to be under accumulation. People are buying this stock between 3.10-3.20. Don't know why they are buying.

4) The plan: for a trade, I will buy at the lower channel near around 3.10 (if I can). Cut loss @ 3.05+-2c. If the stock were to break higher (above 3.20) I will load more.

5) Rationale: a) FA angle, suspecting/guessing/assuming TEN may be under collection by interested parties; b) TA angle, just a short term trade on support and resistance and the indicator signals.


HC

"According to some, reading and believing in what I have written can lead you down the road of misery, hence you are advised to eat more vegetables and drink plenty of water, or you'll end up with a big bad case of constipation..."

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peterloh
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Hilarius,

Just love your analogy of TA and Pavlov's dog.I agree with you fully.

MS,

Personally I think the building industry is currently at its cyclical low.The Federal Reserves and our Reserves are concerned with inflation as an issue and unemployment is at an all time low.However this may all change as soon as we get some other data that the States may be looking into the face of recession, then the Federal Reserves may do something about it.Likewise states like NSW and Vic are having problems with the building industry which forms a greater part of their economy.So monetary policy action won't be the stimulant that is forthcoming in the States or in Australia, rather the Fiscal policy stimulant by the states, regions concern will be the initiator followed by the Federal Reserves or the Reserves Bank in Australia at a later stage when they realised that the threat of inflation has subsided.Australia is having a two tier economy with WA and QLD continuing its growth fuel by the demand of commodities from China and to a lesser extend India.NSW and Vic will be looking at various ways to get their building industry going with the Federal Government looking at lending a helping hand.NSW action of suppressing the booming building(residential) a few years ago was an overkill by introducing vendor's tax, increased land tax and stamp duties on top of GST.

BLD is developing an uptrend channel from August 2006 and its recent acquisition in Australia is building up its business and eliminating and consolidating the building industry further.The building industry in Australia is more promising whilst the States will lag behind and will take a bit longer unless the Federal Reserves lower its interest rate which I do not see it coming till the early part of next year, or the earliest end of the current calender year.

TA wise, BLD has move ahead of itself,whilst fundamentally it is not time yet for BLD to move forward yet.The weekly chart shows BLD is in an upward trend with the SP at the lower channel of this upwards trend.I have sold out of ABC to get into BLD because ABC has not been affected that much by the recent problems of the building industry and in a recovery, BLD will tend to perform better.





-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

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ozmango
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What causes clouds to form? Then what causes clouds to disperse? It is all vanity blowing in the wind. The pattern came and then it went. The wind blows and the wind goes, but I do not know from where it came.


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captain_chaza
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Crikey Ozemango

It is really quite simple

It all comes down to your faith in "Poseidon"
Our God of the Sea

If you can't handle the idea of a god of the Seas then I suggest you invent another God

Many Gods have been used at Sea over the centuries but only "Poseidon" stands out as "The Only True God of the Sea"

From my records Jesus could only walk on water

ie: Sailing at a walking pace?

From my understanding of the facts
Sea-Cadet Jesus could not even sail a ship to save himself!

We all make great mistakes in our lives but picking the wrong Sea-God to worship is Dumber than Dumb

It is no wonder so many brave souls are lost at sea nowadays

Salute and Gods' speed



"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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maxboost
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Captain,
What about huey!
In huey we trust
'He' may be fickle but sometime 'he' delivers with some of the best conditions you will every see.
I salute huey and everything 'he' brings me!
Crikey you have to 'believe' in some right!




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ozmango
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SO what are you saying CHazza baby. Waves are Patterns? Or are you wanting to make waves and the patterns will occur when other people make waves as you zig zag through the channels.


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dug
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Tuesday, December 11, 2007 - 11:49 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ozmango,
if you completely fill out your profile including the hidden Name and Phone Number etc you may be taken off the Time Delay
AND be able Live2Air to give us your angles to Happy Riches.

cheers.
ps-Time Delay is to save us from Rampers and we "welcome" non-TA believers as long as they are specific and not just one line nigglers.



Even 'til Jaded.

Dig for the sake of it.

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dug
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Tuesday, December 11, 2007 - 03:55 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



While we're waiting,in 5 lines or less

Why TA?

It sets the Parameters
on one's
Pilgrim Trip into
Mammon's Chaos that
is which we Trade.


you wasn't gunner come d'Trap of Pooh Pooing Elliott Wave Theory,right?

zigzaggy,
ozemango?

Lookin Forward to what ya Got.

cheers.



Even 'til Jaded.

Dig for the sake of it.

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ozmango
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Tuesday, December 11, 2007 - 06:18 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Dug,

I may or I may not contribute. Sadly, though, if you think I only look at channels and zigzag my way through the night, beware! I pick bottoms, too. And I know this is why T.A.works.

I am also a scalper, so you might not want me here.

You might say my M.A. is worthy of F.A. But being a student of T.A., my M.A. has served me well.

Why does T.A. work? It works because it charts the patterns of human activity on the sharemarket. When people are feeling good, the tide (ie. money) comes in. When people are feeling bad, the tide (ie. money) goes out.

Regardless of anything else, the market will rise and fall based on the weight of money coming in or going out. Although, I haven't met a trader who bought 2 million FGM when they were 5 cents based on Fundamental Analysis or even Technical Analysis. But if anyone did: Congratulations! you are now worth $120 million from that one purchase alone.

Fundamental Analysis requires predicting the future based on past results. Technical Analysis is more reading the market and making short term plays based on probabilities. Amazingly, simple to do, and has a habit of seeing certain patterns recurring on a regular basis. The trick is learning how to read them and knowing how to play them.

Instead of having to put one's faith in a board of directors, one has to put one's faith in the predictability of human behaviour and how the chart patterns develop as a result of the behaviour of the masses.

Those who dismiss Technical Analysis as a form of astrology, need to understand there is a difference between astrology and knowing how to navigate the oceans of the world by reading the night sky. T.A. is like navigating with the knowledge of an astronomer not an astrologist. Whereas, some would say that those who try to predict the future from the past behaviour are more akin to astrologers, even if they might call themselves Fundamental Analysts.

Mind you, Warren Buffet, was a businessman who succeeded because he bought whole companies, not because he traded the markets as a fundamental analyst. Moreover, he had a habit of buying companies that were still able to survive when the tide was out.


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dug
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Wednesday, December 12, 2007 - 10:36 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bottom Picking,Scalping,even trying to work out Market Psychology,well I got no problem with.
But being another Southerner,ohh I despair!

I'm not the Security Guard around here.Just ex-Bouncer.
There's a subtle difference.
Anyhow,you should contribute cos putting down your Ideas can both Fine Tune your own thoughts as well as give a single angle for others to pursue.
If you are Leveraging there's many here who'll agree with you.
If your concentrated in say the Top 300,again there's many to chat.
Me[and the Captain],well we're not hot on borrowing or the over Analysed Blue Chips.Charles has Opinions on these,me?I just don't wanna know.

Anyhow,ozmango we've heard let alone practised a lot of methods.It'd be good if you used the IC charting package in any of your posts on specific shares,it's just "polite".
Also remember to completely fill out your profile so the Time Delay is lifted quicker and be advised that there is a No Advertising Rule.
gotta go,
cheers.



Even 'til Jaded.

Dig for the sake of it.

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ozmango
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Wednesday, December 12, 2007 - 11:02 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Fine Dug, I give you the courtesy of a reply. There are many ways to play the market. Learning how to make money is the only way that counts.

If you are able to turn a profit playing penny dreadfuls, fine. If you are able to get some info on small caps and make a killing fine. If you play the ASX 200 or only ASX20 then that is fine too. What always counts is making profit. No money for the dunny, just plenty of cash to splash! Otherwise, it doesn't matter what we prefer, it ain't good oil.

I don't trade stocks. I trade indices. I found that the tide is easier to read in the indices and I can get in and out quickly, go long or go short without hassles.

Even though I have subscribed to the I.C. free charts, I don't use them because I have a live charts. But they are a great tool and I think the information on this site is commendable.

For me T.A. works, but if I were to be trading stocks, I might be inclined to watch what the directors are doing and read the reports. Which what I used to do when trading shares, but find trading indices is less time consuming.

So really there might not be too much for me to offer, since this site has heaps of excellent information as it is.


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pse
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Wednesday, December 12, 2007 - 11:57 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ozmango
u might like to share your thoughts and experiences over at "trading the XJO"(FTSE also), sectors and indicies.
peter


"TRADE WHAT IS, NOT WHAT MIGHT BE"

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hilarius
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Wednesday, December 12, 2007 - 12:03 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ozmango

I consider the results obtainable from FA + TA to be superior to those from either alone

You make like to read William O'Neil's book "How to Make Money in Stocks" where he puts forward the view, supported with information and reasons, that all major price moves in stocks with earnings are preceded by announcements of major earnings improvements of the order of 15% per share or more, and ideally greater than 20% improvement in reported EPS

Future earnings can be calculated by reference to past growth and future market condition estimates. They do not rely solely on past trends ... and any analyst worth his pay who relied on past information alone would not survive for long

TA is extremely useful for timing of entries in identified uptrends ... preferably on the occurrence of a start of a recovery from a higher low, after a higher high

Do you consider the market as a whole is currently in Stage 2, Stage 3, or Stage 4, using Weinstein's TA definitions?

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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colin_twiggs
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Wednesday, December 12, 2007 - 05:45 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Charles,

Remember rule #1.


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captain_chaza
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Wednesday, December 12, 2007 - 06:18 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



My Apologies Dear Friar if you felt insulted?

I was only trying to help and shock you out of making any more bad moves/bad mistakes

It is certainly none of my business
BUT

I will promise not to laugh at any of your thoughts/mistaken ideas if you promise to give "The Market" the respect she deserves?

Salute and Gods' Speed



"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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hilarius
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Wednesday, December 12, 2007 - 06:28 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Dear Captain

I enjoyed the weekly competition, especially when one week I won with a half cent price increase

It was a stormy 5 days on the bay for most of the participants that week

My dinghy sailing days are now over, having quit the market over two months ago, converting all but a token amount to cash

Safety at sea is paramount

Hilarius


I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

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captain_chaza
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Wednesday, December 12, 2007 - 06:36 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ahoy Dear Friar

I do agree with you that

"Safety at Sea is Paramount" but
"Sincerity is Everthing"

Once you Learn to Fake "Sincerity"
You can do Anything!

Salute and Gods' speed



(Message edited by Captain_Chaza on December 12, 2007)


"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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coyotte
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Thursday, December 13, 2007 - 07:38 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Just looking at the 12/12/07 CNBC reports on the US markets by Guppy and McLaren -- I think most would agree both are experts in the T/A field --- well these two experts with conditions attached , have come to opposing conclusions on the same Markets/Charts .

If these guys can not agree, then God help us mere mortals .


The "Sea of Uncertainty" is defeated by the nimble vessel "Probability", not the unwieldy vessel "Prediction".

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ozmango
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Thursday, December 13, 2007 - 11:00 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Coyote,

The problem for most of us is that we can be easily influenced by the weather. Whether it is hot or cold, or whether I am having a good day or a bad day, or whether it is raining or sunny.

McClaren tries do hard to be right, he is never wrong, just read his reports and you will see that when he was wrong, he was actually right because he made some suggestion about some other possibility.

When it comes to making predictions, because we are merely mortals with very, very, limited knowledge in our infinitesimally small brain and are not omniscient, then we will always be guessing to a large extent. The trouble is most people like to think their guess is always a better guess than others and hate to admit they might be wrong. Because of this, people who make guesses, like astrologers, card readers, and other psychics, are always tricking people by saying they were right.

An example of this is a self-professed clairvoyant I know, who claims he has this particular psychic ability and is a prominent member of the spiritualist movement. When he met me, he asked me to tell him how old he was, I told him exactly, then he told me I was wrong. Then he told me how old I was and was out by 15 years. When I told him my real age, 4 minutes later into the conversation, this clown says, "As I was saying when I told you you were 50, I have this ability to know your needs and can tell exactly what vitamins and minerals to take." I reminded him he was wrong, and he suggested that I did here him properly, because he definitely told me my correct age.

How did I know his real age? Apart from the fact I could see it on his arms, even though he looks younger in the face, the fool obviously did not recognize me from having purchased products from his shop over the last 30 years, and he was 40yrs old when I first went there.

So my point is that people like to think that they are superior than other people and try to bluff or hoodwink as many gullible people into believing them.

Now, I am not sure about Guppy. I do know about McClaren and others who claim to be experts at T.A.. The truth is it is about probabilities and while McClaren gets things wrong from time to time, he also gets the market right, too. Although, he not purely T.A. He looks at the other factors in world when making his assessment.

Reality is that T.A. is all about probabilities and knowing that particular criteria will occur under certain circumstances. For instance, when the market falls and then double bottoms, the chances of it rebounding become more likely than not. Get this right 8/10 times and you will be making money. Then there are some other very reliable patterns, that have have a high degree of predictability. But trying to predict what the market will do over a week can be difficult.

Colin Twiggs for example, has made a number of predictions of the market going down further than it has based on a wedge. However, these predictions have an underlying belief that economic conditions demand it.

The reality is that more money has to be invested in the market because it has no where else to go. Because of this the market will always go up, even if it goes down, for a while. The other reality is the market will fall faster than it rises, because fear is how people are conditioned and is not easily overcome.

The elements of fear, uncertainty, and confidence are all reflected in the patterns within the charts. Knowing how to read the patterns and recognizing what pattern points to what is really what brings T.A. into its own. Trying to interpret economic conditions and then superimposing this interpretation on top of the charts to make some prediction will produce different predictions.

T.A. is about understanding human behavior and then recognizing entry points to make a trade that has a very high probabability of success. Get this right 70% of the time and you make a comfortable living.


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coyotte
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Saturday, December 15, 2007 - 01:27 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ozmango :

firstly have never used McLaren's Subscribed Report but do follow his CNBC report which I use as a refresher --- I do subscribe to Guppy's Newsletter again mainly as a refresher .

I don't really follow where your coming from (unless U are referring to McLaren's Subscribed Report ) about the prediction bit.

McLaren was saying that IF the DN move in the DOW was not followed through with then in all probability it would rise to it's recent Highs -- but no more -- what was needed was a washout back to and just below the Aug Low to allow for a new high .

Guppy has been saying over the last few months and again repeated it on CNBC that since the Indexes are bouncing off areas of no support (ie midair ) there are no T/A reliable factors to support the moves .

In other words Guppy seems to be saying that for the move to be genuine it must bounce off a old resistance area -- this is in total contrast to the McLaren approach that a counter move prior to previous Supp/Restic is a very strong move.

The point I was trying to make was that opposing schools of T/A just seem to take it in turns OR is it as I suspect " horses for courses ".


.







The "Sea of Uncertainty" is defeated by the nimble vessel "Probability", not the unwieldy vessel "Prediction".

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y3k
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Thursday, January 17, 2008 - 04:32 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



doest this work,i dont think so


http://www.easy-forex.com/Gateway.aspx?gid=11835

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