Saturday, January 30, 2016

Does Technical Analysis evolve and improve?

The brief answer is: Yes.

The question is: Since technical analysis is based only on price movements, there must be limitations on the knowledge growth possible in TA.
After all, how much analysis is possible on prices!
Therefore, all the knowledge that could be developed has probably been developed. No further research is needed.

My answer to this question is : Like most other arts and sciences, Technical Analysis, evolves, discovers, innovates and improves.

TA started with Candlestick analysis in Japan, several hundred years ago. It was rediscovered in America in the late 1800's, then bloomed into a variety of innovative thoughts: classical charts, Wyckoff, Elliot waves, Gann, Hurst, point and figure, and more. In recent years, developments include cycle analysis, data mining, system trading, portfolio testing, high frequency trading, automatic pattern recognition, inter market relationships, trading in ETF's, futures and options. This list could easily continue.

I would suggest to TA traders and analysts: understand that learning is a continuous process. Have the hunger and thirst to learn more and more.


Saturday, January 16, 2016

Uncertain and Unknown

Barry Ritholtz discusses 'surprises' in a Bloomberg Article.

I am giving below my own thoughts, using his article as a basis for my ideas.

Markets are uncertain. This means that outcomes are not known in advance. Markets do not offer multiple choice questions. If the correct answer is always one out of four possibilities, there is no uncertainty, making trading and investing rather easy.

But Markets do not oblige us by offering such choices. Unknown and unusual events can affect the market, sentiment can turn due to actions that may not be related at all to market behavior. There is no equation which gives a specific outcome or a choice of specific outcomes if there is a certain event.

Ritholtz says: "“Uncertain” and “unknown” are two very different things. Roll a pair of dice, and the results are unknown in advance, but are hardly uncertain. The set of possible outcomes is well understood (1, 1; 1, 2; 1, 3; and so on). Uncertainty is when the possible outcomes are wholly unknown and unknowable. War is a classic example of uncertainty. "

The Human being survived million of years of natural evolution because they were just 'good enough' to survive. We cannot claim that the human species is perfect. How do we know this anyway? what is the measurement of perfection? All, we have to be is meet the requirements for being better than normal.

The same applies to investors and traders. Traders who aspire perfection will never get it. Traders who want positive outcomes from their trading will consistently make money.

We now come back to the 'uncertain'. Traders must acknowledge that many of the Market actions are uncertain. Their approach to markets should be accept the effects of uncertainty, continue their trading, wait patiently for unknown, uncertain times to pass by. Also, Do not try to predict what is not known!

Friday, January 15, 2016

Okhla Meeting Directions