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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (7166)	7/14/2001 5:16:37 AM
From: AllansAlias	Respond to of 209892

(duplicate)

To: GraceZ who wrote (7166)	7/14/2001 5:16:37 AM
From: AllansAlias	Read Replies (2) \| Respond to of 209892

Well, I find myself wide awake here at 5 in the morning on a Saturday. That's odd for me, unless it's because I am just going to bed, which is not the case today. No matter. Today should be the last day of working on the boat. We'll install the new mast and finish the last bits of varnish and finish work. If the weather is fair tomorrow we'll be re-launching my little Praha. There is much debate here from time to time on the value of Elliott, and to a lesser extent, technical analysis. That's fine, but it prompts me to repost some of the observations I hold true and dear (-g) based on these last 3 years or so. I'm quite sure that very little of what I say here is original per se, but nonetheless, they are conclusions that I have come to believe in as a result of my own work. First of all, I consider technical analysis and Elliott to be two different approaches. TA, above all else, deals with patterns and support/resistance. A secondary area is the application of math functions on price and volume (e.g., indicators). This area has been the focus of most modern TA work, particularly since the 1970's. It is also the garden path that attracts most people new to TA. Why do we bother with TA and Elliott? Fundamental analysis is a waste of time for getting into and out of a position. One may have a strong notion that a market or an instrument should run a certain direction, but without TA and/or Elliott, you will be just guessing at entries and exits. TA and Elliott answer two questions: 1) Risk: Is this is high probability place to buy/sell this instrument. The simplest example of this is buying at support or selling at resistance. 2) <Reward: Is there a high probability that my proposed position will run well in my direction. For example, does the current pattern suggest a strong move and is there a lack of strong resistance in the direction of my trade? Technical analysis can not predict future market direction. It's strength lies in identifying setups that offer a high probability of success. Anybody who does not believe this is wasting their time and money. Anybody who wants to argue this with me is wasting my time. Elliott is a different cat. Although it also is an excellent tool for identifying potentially good trades, it offers something that TA does not -- it can be used to predict future market direction, some of the time. Yes, only some of the time. The worst thing I see Elliott folk try to do, and I have also done it too often, is fit the market to an Elliott pattern. I think Elliott is probably an excellent tool to apply at market turns and in trends, but since the market is correcting over 50% of the time, it is mostly a waste of time to apply Elliott during such corrective periods. For my purposed, I have changed my approach during corrections: I spend less time worrying about what possible Elliott count will be built and instead concentrate on the triggers that will tell me when the correction is over. Another strength of Elliott vis a vis TA is that one can forecast price targets with reasonable accuracy. There are 4 of 5 aspects to Elliott price projections, the most common being the use of Fibo values. Even non-Elliott types will often refer to price retracing 50% or 62% and so on. An even stronger aspect of price projection is the targeting of price during an impulsive move (i.e., not a retracement). I am not an Elliott Wave expert, but I continue to study and trade and refine my use of the discipline. The most important thing I have learned in the last year or so is that (a) it's an excellent tool and (b) that it's a waste of time during complicated corrective periods. The best trades are when everything lines up. For example, when TA shows price coming back to good support, Elliott is displaying a potentially explosive bullish move, and sentiment is negative. These setups are infrequent, but if I were more patient, I am convinced that I could make a good living just waiting for them and trading more aggressively when they present themselves. In the end, what one realizes when one has more than a passing fancy with trading/investing, is that one has to buy near the bottom and sell near the top. This is what the smart money does, and even with limited resources, it is what we must try to do. TA, Elliott, and sentiment can greatly increase your chances of buying near bottoms and selling near tops. It ain't what the books tell us, but the books in question are just plain wrong. Finally, these tools I use, TA, Elliott, and sentiment, are not worth squat if you don't follow your trading strategy/plan and exercise good risk management. This is the sort of thing that everyone says, but there's a reason for that. -g Wednesday was yet another re-learning of this lesson for me. Fellow posters know that I planned to get long for what I saw as a potentially good move to the upside. What happened? Well, I got sidetracked by the wiggles and ended up missing the move. This made me so angry at myself that I invoked my "Forced Day Off Rule" on Thursday so that I would not waste my money trying to get even or chasing the market. Well, writing this missive took me through a decent sunrise here on the bay -- a bay that I hope to be on tomorrow. Cheers.