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Online Share Trading

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The purpose of technical analysis

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Not applicable
Every now and then, I re-confirm my golden rules by starting with the objectives for my technical buy / sell signals. 1) TA is supposed to provide you with high probability trades - this is obvious 2) And this is more important, a trade needs to reflect a condition that you would repeat over and over again if met. This is key - if you are going to accept being wrong say 40% of the time - you will still lose if you don't execute your trades again on that instance where you could potentially be right! So TA must describe a situation that you a)can identify easily) and b) would take the trade every single time
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9 REPLIES 9
SimonPB
Valued Contributor
very much agree with last three points .. not so sure about first one .. desire for high probability falls into the trap of needing to win .. a 35% win ratio can make money, if winners more than 2x losers ..
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Not applicable
Ja, with you on the high probability option. I use TA to statistically test the probability of sideways movement - which is the real killer.
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john_1
Super Contributor
well I think that about sums it up....if you can show a child a graph and he say its up or down buy or sell but if you cant show a five year old...dont trade
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Rams
Super Contributor
I think its a big con(conspiracy).The professionals are waiting for us to execute the trades on the charts that they drew up yesterday.The only difference is that today they have turned the charts upside down!
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SimonPB
Valued Contributor
an if you think that, never mind believe it, your chance of making money on the market is zero ..
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john_1
Super Contributor
not to mention you are making a huge assumption...and that is the pro's are smart enough to actually concieve of such a plan never mind actually implement it!!!
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Blik
Super Contributor
Simon and John burning the midnight oil....
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partridge
Super Contributor
skaaptjop makes sense - but think of it this way the underlying presupposition is that people, given a similar set of circumstances will behave in the same way - after all no sales or purchases = no market? Chartists are relying on trends - but in my very humble opinion while I can see that applying to markets - I sturggle to apply that to individual shares? Once again I point you to the sublime wisdon in John Kay's last book...
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john_1
Super Contributor
Partridge... the basic concept is that human being don't handle the unknown very well, the greater the threat(risk) the more likly that human will seek refuge in each other company. One only has to watch human on a beach...massive space yet they are always found togehter in clumps...this is the driver of trends in markets..the greater the uncertanty the greater they will follow the decsions of others...understand this and you start to understand the value of TA>
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