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Strategies & Market Trends : Trading the SPOOs with Patrick Slevin! -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (6868)	10/2/2001 5:31:09 PM
From: fut_trade	Read Replies (1) \| Respond to of 7434

I first came across the term discretionary trader a few weeks ago. There are alot of TA books in the Borders and Barnes and Noble these days, and one can see loads of charts with indicators on them showing a perfect buy set up. But few books analyze those indicators over many trades to determine if such an indicator works in the "real world". From the tests I've done so far, I've found that most indicators can't generate enough profits to cover fees and slippage. But that doesn't appear in print in the TA books. I asked one person who had written a TA book about why the indicators aren't tested in more detail, and he simply claimed to be a discretionary trader - end of discussion! Aside from that, the term "discretionary trader" doesn't mean much to me. But I now have very little confidence that anything written about TA has any value, except in the rare instance where the indicator is backed up with detailed test results. I think one of classic authors with fancy indicators and no tests whatsoever is DeMark. Even Edwards & Magee's "technical analysis of stock trends" leaves a lot to be desired. They sure leverage that book. I think it's up to the 8th edition now and includes all kinds of plots with moving averages, stochastics, bollinger bands, etc, but with no evidence that such methods work statistically. About the only thing I trust now are detailed system studies of profits and drawdowns over several years of historical data. Of course, then one runs into other problems like over-optimization, forward vs. backward testing, etc.