|
Posted by on August 24, 2008, 6:58 pm
It's easy to look at a chart and say damn, that's a strong buy signal,
and sure enough the price bolts upward after the signal and then see
other past examples and say "Damn! this stuff really works!" I can
guarantee you that it doesn't work, and that if you look at enough
charts, you will find I'm right. But there's a simpler approach to
prove none of these typical conventional indicators work.
Typical TA's such as rsi williams %R stochastics CCI DMI macd roc smi
stix obv money flow momentum, ult oscillator, bollinger bands etc etc
etc are all bogus and fail at forecasting what happens next and even
defining future trends over a range of future time periods. Here's the
indisputable proof:
Take any group of 14 random numbers between 0 and 100.
ie 65,31,77,38,92,35,77,46,61,83,94,33,77,88.
Now tell me what number will appear next. You can't. You cannot even
tell me what numbers will "tend" to come up next more than other
numbers. You cannot even tell me what range of numbers will tend to
show up next. The reason is any number or group of numbers or range of
numbers will show up next with no trend at all. There will be a 0%
bias to what number, trend of numbers, trend of range or trend of
range of series of numbers shows up next.
Yet this is what you expect from typical technical indicator. You
expect them to do the impossible.
Let's say the indicator you use currently indicates the strongest buy
signal in the universe. One that has worked the last ten times in a
row. Now write down the data values of the last 14 bars. For the sake
of argument, let's say it is:
68,67,72,73,72,73,74,73,75,72,73,73,74,75. Ok, Mr. Wise Indicator,
what comes next? What will the trend be next? What range will trend
next? Answer: of course, that's impossible to say. Emphasis on the
work impossible.
You can do the same for the values of the inicator. Let's say they are
65,31,77,38,92,35,77,46,61,83,94,33,77,88. What value will be next?
Impossible to know that. What range? Impossible to know that. What
range trend? Impossible to know that.
Indicators generally default to 14 bars back. Increasing the range
increases undesirable lag which is a huge catch 22.
So there you go. Proof positive that it is 100% for all conventional
indicators to work. They are all 100% bogus.
So when you hear the typical hype like "the RSI crossed under 20
therefore it's very bullish and sending out huge buy signals on XYZ,"
you know the source is either deliberately lying to entice buyers/
traders, green and overly optimistic, or is just plain illogical.
Either way, you know to move on.
Hopefully after reading this, you won't go out and spend thousands of
dollars on stock market trading software that offer such bogus
indicators .. which is all of them. Pass this proof around.
|
|
Posted by on September 22, 2008, 1:00 am
I posted this "heads up" on TA almost a month ago
.. glad everyone who's logged in and has read this doesn't disagree.
People are finally waking up.
|
| Similar Threads | Posted | | Which technical indicators will work for you? | July 14, 2006, 12:43 pm |
| Which technical indicators work? | April 26, 2006, 8:04 pm |
| Using several technical analysis indicators on the DJIA | May 14, 2007, 5:35 pm |
| QQQQ technical indicators are overbought | May 18, 2008, 10:52 pm |
| S&P 500 technical indicators have bullish divergence | November 16, 2008, 4:33 pm |
| There are plenty of technical indicators used by traders in different combinations | November 13, 2006, 6:01 pm |
| TECHNICAL SOFTWARES FOR TECHNICAL ANALYSES . DO HAVE A LOOK FOR THE LARGEST COLLECTION | July 24, 2007, 2:55 pm |
| TECHNICAL SOFTWARES FOR TECHNICAL ANALYSES . DO HAVE A LOOK FOR THE LARGEST COLLECTION | July 24, 2007, 10:06 am |
| Here's the deal- A real technical investment for technical investors | October 13, 2008, 9:22 pm |
| Technical Analysis ( Trading ) books and programs 2008-2004, PART2 ( out of 6 ), the latest collection, updated 2008-03-03, Tradestation 8.3 + OwnData 2.6, MTPredictor for TS, MTPredictor for Ninja, ProfitSource 3.4 & Tutorials, Financial and Technical An | April 26, 2008, 7:38 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap