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I wasn't really talking about useless, lofty metaphysical or
philosophical "whys", but practical ones.:) TA-based indicators can
be heavily lagged or even fail outright just like economic and
fundamental ones, which is the reason the "why" is so important.
For example, Jerry said he's been using triangles successfully for
years. Why do they work? Because they capture a repeating market
behavior, the tendency of momentum in a particular direction to
continue. Deeper down, they capture a repeating psychological
behavior, the unwillingness of certain traders to quickly accept that
they're wrong. Their slow, gradual acceptance is what maintains a
trend, and when they're finally all convinced, the trend ends.
My point is that unless a trader understands the underlying principles
of why something works he may just be following a bogus system that
works for a while, but will eventually screw him. I'm sure that you
and other careful, conscientious traders here get this, but not
everyone reading these posts does.
Luck,
Sebastian
--- In amibroker@xxxxxxxxxxxxxxx, "Fred" <ftonetti@xxx> wrote:
>
> While I would agree that for the most part indicators and systems are
> not the cause of price action, imho good indicators and systems are
> designed to recognize high probabilty realities burried in noise ...
> As far as the why's are concerned ... I already know a myriad of
> reasons it's not like all economic and fundamental data which by
> their nature lag not only reality but price as well. One could spend
> a lifetime looking for the answers to the why's and never derive
> anything useful for trading / investing. As a result I'll leave the
> why's to the philosophers and concern myself with the when's and the
> what's.
>
> --- In amibroker@xxxxxxxxxxxxxxx, "sebastiandanconia"
> <sebastiandanconia@> wrote:
> >
> > "...I suggest it is not due to limitations of our equipment, but
> simply
> > a system that is no good as it is explained..."
> >
> > That's precisely the conclusion I've come to, and it's all Tomasz's
> > fault for building AB and making such testing possible.:)
> >
> > If I can strain your chess analogy a little bit, the edge that
> > grandmasters have is that, of all the potential moves available to
> them
> > they can quickly recognize the critical ones and focus on them,
> > excluding all the others as unimportant "noise."
> >
> > As traders, that's what I think we should aspire to. A stock
> doesn't go
> > up because a 5-day EMA crosses above a 20-day EMA or because the
> > directional movement index is positive and the ADX is greater than
> 30.
> > Those indicators coincide with the stock's uptrend but aren't the
> cause.
> > Neither is the cause to be found in linear regression, Gann angles,
> > Fibonnaci numbers, etc. What is the cause, then? Theorize, and
> then
> > test the theory for validity. That's when we can start to learn
> > something. Otherwise, all we're doing is testing random data for
> > patterns that are only meaningless coincidences, like the Superbowl
> > Theory.
> >
> > And that's enough sermonizing from me.:)
> >
> >
> > Luck,
> >
> > Sebastian
> > --- In amibroker@xxxxxxxxxxxxxxx, "M Webb" <the_bear_98@> wrote:
> > >
> > >
> > > In the old days, programming a computer to play chess and capture
> the
> > mind of a Grandmaster, with the instant "pattern recognition" they
> > possessed was very difficult. It took many years before the
> combination
> > of computing power and programming finally got rolling. Now we have
> > programs that will beat you like a borrowed mule. It is easy to
> grade
> > these programs as they have ratings that prove how good they are.
> During
> > this same time frame, we now have the computers and programming to
> > really back-test and prove a trading theory might have worked in the
> > past. We can go buy a book, program it, and discover it doesn't
> produce
> > a reward/risk worth trying at all. Now in the old days, the
> Grandmaster
> > would say "I only think one move ahead, but it is always the best
> move."
> > We found a way to mostly brute force find the same move, but when
> we try
> > to program one of the successful traders systems, the back-test
> does not
> > pan out. I suggest it is not due to limitations of our equipment,
> but
> > simply a system that is no good as it is explained.
> > >
> > > Although it might be theoretically possible to combine two losing
> > systems with a magic ranking process that could produce an overall
> > winner, I feel safe in saying no one can come up with an example
> they
> > would share.
> > >
> > > Monty
> > >
> > > ----- Original Message -----
> > > From: allansn@
> > > To: amibroker@xxxxxxxxxxxxxxx
> > > Sent: Friday, October 20, 2006 12:44 PM
> > > Subject: Re: [amibroker] Re: Scan for Bulkowski's chart patterns
> > >
> > >
> > >
> > > Just out of curiousity,is it possible to have two non correlated
> > trading techniques that show negative backtest results
> individually,but
> > when combined produce above average returns...
> > >
> > > I am over in Elite trader observing a candlestick debate,and
> trying
> > to understand how "savvy" traders who fully acknowledge that
> > candlepatterns fail miserably in backtests insist that they are a
> great
> > confirming indicator..
> > >
> > > Is there a method to this madness??
> > >
> > > Allan
> > >
> > >
> > >
> > > ----- Original Message -----
> > > From: sebastiandanconia
> > > Date: Friday, October 20, 2006 10:33 am
> > > Subject: [amibroker] Re: Scan for Bulkowski's chart patterns
> > > To: amibroker@xxxxxxxxxxxxxxx
> > >
> > > > I've read about this kind of behavior before, and it's a
> problem
> > for
> > > > anyone who is trying to emulate the methods of successful (or
> > > > allegedlysuccessful) traders. What is happening is that these
> > > > traders aren't
> > > > fully conscious of everything in their decision-making
> process.
> > There
> > > > are "soft" factors that are key to their success that AREN'T
> in
> > their
> > > > "written down" or "official" methods. And if every factor
> isn't
> > > > included the method can't be accurately tested for validity.
> > > >
> > > > JMO, but I suspect that's one of the reasons it's so
> difficult for
> > > > traders to duplicate the success of even legitimate, well-
> meaning
> > > > system-sellers or "gurus." Maybe they really know something
> > > > unique, or
> > > > maybe they just had a run of luck when their "fuzzy" thinking
> > > > paid off
> > > > but that particular set of conditions won't ever be repeated.
> > > >
> > > >
> > > > Luck,
> > > >
> > > > Sebastian
> > > > --- In amibroker@xxxxxxxxxxxxxxx, allansn@ wrote:
> > > > >
> > > > > Hi Jim,
> > > > >
> > > > > What I find interesting about various pattern recognitions
> > > > such as Edwards and Magee type formations and candlesticks is
> > > > when you
> > > > backtest them in isolation they simply show no predictive
> > > > power.I am
> > > > predominantly refferring to Candlesticks as I have done
> extensive
> > > > testing in that area.
> > > > >
> > > > > Yet,I have friends who strictly trade off them with western
> > price
> > > > patterns and trendlines and return well over 50% annually.
> > > > >
> > > > > Others I know use them as a filter to their systematic
> > trading,and
> > > > they know full well that Candlesticks do not backtest well.But
> > > > they wont
> > > > trade without them
> > > > >
> > > > > Interesting how the mind works
> > > > >
> > > > > Allan
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > > ----- Original Message -----
> > > > > From: jwmc107
> > > > > Date: Thursday, October 19, 2006 7:48 pm
> > > > > Subject: [amibroker] Re: Scan for Bulkowski's chart patterns
> > > > > To: amibroker@xxxxxxxxxxxxxxx
> > > > >
> > > > > >
> > > > > > Hi Joe, Brian, Alan and others,
> > > > > >
> > > > > > Here are Tom's trading results:
> > > > > > Year 2000 2001 2002 2003 2004 2005
> > > > > > Tomas 14.80% 18.70% 9.00% 13.50% 29.10% 15.40%
> > > > > > S&P500 -10.10% -13.00% -23.40% 28.69% 10.88% 4.91%
> > > > > > Nasdaq -39.30% -21.10% -31.50% 50.00% 8.60% 1.40%
> > > > > > DJIA -6.20% -7.10% -16.80% 28.28% 5.31% 1.72%
> > > > > >
> > > > > > The results speak that the system works. Hope that
> someone can
> > > > > > make
> > > > > > the code available, as I dont have any programming skill
> > myself.
> > > > > >
> > > > > > There are WL codes available, we can just translate it to
> AFL.
> > > > > >
> > > > > > Regards,
> > > > > > Jim
> > > > > >
> > > > > > --- In amibroker@xxxxxxxxxxxxxxx, "Joe Landry" wrote:
> > > > > > >
> > > > > > > Allan
> > > > > > > I had to think back a bit. Well I'm schiz'ed, a
> > > > > > fundamentalist
> > > > > > and a technician. Making money on fundamentals right
> > > > > > now(Validea)
> > > > > > but I know what
> > > > > > > will preserve it is technical analysis.(or risk
> management?)
> > > > > > >
> > > > > > > What might be an interesting side note, we had Nelson
> > Freeburg
> > > > > > of
> > > > > > Formula Research give a talk to us last Sat. and
> > > > > > > he related as to how his first investment book while he
> > > > was at
> > > > > > Columbia was Martin Pring's early TA book. This led to his
> > > > > > development of a first "system" called Primas (Pring
> Moving
> > > > > > Average
> > > > > > System). I've got a cam video of his talk on our server,
> let
> > > > > > me
> > > > > > know if you'd like to down load it.
> > > > > > >
> > > > > > > Best regards
> > > > > > > JOE
> > > > > > > ----- Original Message -----
> > > > > > > From: allansn@
> > > > > > > To: amibroker@xxxxxxxxxxxxxxx
> > > > > > > Sent: Thursday, October 19, 2006 7:53 AM
> > > > > > > Subject: Re: [amibroker] Re: Scan for Bulkowski's chart
> > patterns
> > > > > > >
> > > > > > >
> > > > > > > Joe,
> > > > > > > I am shocked...I never would have taken you for a
> > > > > > closet "Edwards and Magee" man :)
> > > > > > >
> > > > > > > Allan
> > > > > > >
> > > > > > > ----- Original Message -----
> > > > > > > From: Joe Landry
> > > > > > > Date: Thursday, October 19, 2006 8:15 am
> > > > > > > Subject: Re: [amibroker] Re: Scan for Bulkowski's chart
> > patterns
> > > > > > > To: amibroker@xxxxxxxxxxxxxxx
> > > > > > >
> > > > > > > > I just dusted it off Dimitris' program again and was
> > > > > > stepping
> > > > > > > > through the
> > > > > > > > selections.
> > > > > > > > If you're not familiar with it you might want to
> check out
> > > > > > > > Anthony
> > > > > > > > Faragasso's charting script
> > > > > > > > as labelled below and in the program library. It's a
> good
> > > > > > > > companion for this
> > > > > > > > exploration.
> > > > > > > >
> > > > > > > > I tried my hand at on of his most successful patterns
> > > > > > called
> > > > > > > > "pipes" but was
> > > > > > > > not happy with the results.
> > > > > > > >
> > > > > > > > BTW Bulkowski has a newer paperback called Getting
> Started
> > > > > > in
> > > > > > > > Chart Patterns
> > > > > > > > pub within
> > > > > > > > the last year.
> > > > > > > >
> > > > > > > > As far as Thomas is concerned, I would be a potential
> > > > > > customer
> > > > > > > > for a set of
> > > > > > > > Bulkowski pattern recognition
> > > > > > > > routines if such were to be produced and put up for
> sale.
> > > > > > > >
> > > > > > > > Best regards
> > > > > > > > JOE
> > > > > > > > SECTION_BEGIN("Pattern Recog. Tony Farragasso");
> > > > > > > >
> > > > > > > > // Name and Purpose ----------------- Faragasso
> Pattern
> > > > > > > > Recognition -----------------
> > > > > > > >
> > > > > > > > // Date 11/23/03
> > > > > > > >
> > > > > > > > // Source Anthony Faragasso
> > > > > > > >
> > > > > > > > // Type Indicator, Exploration, AB PT
> > > > > > > >
> > > > > > > > // Patterns Wedge, Broad, Upchannel, Bearish.
> > > > > > > >
> > > > > > > >
> > > > > > > > ----- Original Message -----
> > > > > > > > From: "brian.z123"
> > > > > > > > To:
> > > > > > > > Sent: Thursday, October 19, 2006 12:50 AM
> > > > > > > > Subject: [amibroker] Re: Scan for Bulkowski's chart
> > patterns
> > > > > > > >
> > > > > > > >
> > > > > > > > > Hello Jim,
> > > > > > > > >
> > > > > > > > > Do you mean the chart patterns from Bulkowskis
> > > > > > encyclopedia
> > > > > > > > (over 60
> > > > > > > > > patterns)?
> > > > > > > > >
> > > > > > > > > If you want to code them in AFL some have been done
> by
> > > > > > Dmitiris
> > > > > > > > > Tsokaki! s (Hello Dimitris, I hope the fish are
> jumping
> > > > > > into
> > > > > > your
> > > > > > > > > boat)....from the AFL library.
> > > > > > > > >
> > > > > > > > > Formula name: Pattern Recognition Exploration
> > > > > > > > > Author/Uploader: Dimitris Tsokakis - tsokakis [at]
> > oneway.gr
> > > > > > > > > Date/Time added: 2001-09-03 14:03:35
> > > > > > > > > Origin:
> > > > > > > > > Keywords:
> > > > > > > > > Level: medium
> > > > > > > > > Flags: exploration
> > > > > > > > >
> > > > > > > > > DISCLAIMER: Most formulas present in AFL on-line
> > > > library are
> > > > > > > > > submitted by the users and are provided here on
> an "as
> > > > > > is"
> > > > > > and "as
> > > > > > > > > available" basis. AmiBroker.com makes no
> > > > representations or
> > > > > > > > > warranties of any kind to the contents or the
> operation
> > > > > > of
> > > > > > material
> > > > > > > > > presented here. We do not maintain nor provide
> technical
> > > > > > > > support for
> > > > > > > > > 3rd party formulas.
> > > > > > > > >
> > > > > > > > > Download formula file | Delete formula
> > > > > > > > >
> > > > > > > > > Description:
> > > > > > > > > Paste the code in Automatic Analysis and Explore All
> > > > > > Stocks
> > > > > > > > for the
> > > > > > > > > last date of your data.
> > > > > > > > > In Results click twice a label , for example "a TR"
> and
> > > > > > you
> > > > > > will
> > > > > > > > > collect all ascending Triangles marked with an "1".
> > > > > > > > > This Exploration recognizes the following patterns:
> > > > > > > > > +Ascending Wedges "aW"
> > > > > > > > > +Descending Wedges "dW"
> > > > > > > > > + ascending Triangles "a TR"
> > > > > > > > > +descending Triangles "d TR"
> > > > > > > > > +ascending channel "a ll"
> > > > > > > > > +descending channel "d ll"
> > > > > > > > > +almost horizontal channel "ll"
> > > > > > > > > +Converging Support and Resistance
> > > > > > > > > +Diverging Support and Resistance
> > > > > > > > > +N/A, ie examples not belonging to any above
> category.
> > > > > > > > > You may decrease sensitivity, changing
> > > > > > > > > per=3;
> > > > > > > > > with another percentage higher than 3.
> > > > > > > > > For Indicator Builder paste the code in Comments
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > It would be an interesting project to code all of
> the
> > > > > > major
> > > > > > patterns
> > > > > > > > > (if it hasn'! t been d one already).
> > > > > > > > >
> > > > > > > > > There is also a formula there for identifying candle
> > > > > > patterns
> > > > > > > > by Top
> > > > > > > > > Gun Herman van den Bergen....
> > > > > > > > >
> > > > > > > > > Converting candles to bar chart patterns would be
> > another
> > > > > > > > > interesting project.
> > > > > > > > > I'll do both projects if I run out of things to do.
> > > > > > > > >
> > > > > > > > > I haven't tried either of the formulas....I just
> noticed
> > > > > > them there
> > > > > > > > > the other day so passing it on to you.
> > > > > > > > >
> > > > > > > > > BrianB2.
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > --- In amibroker@xxxxxxxxxxxxxxx, "jwmc107" wrote:
> > > > > > > > >>
> > > > > > > > >>
> > > > > > > > >>
> > > > > > > > >> Is there any AFL code to scan for Bulkowski's chart
> > > > > > patterns and
> > > > > > > > > to
> > > > > > > > >> share with?
> > > > > > > > >>
> > > > > > > > >> Thanks,
> > > > > > > > >> Jim
> > > > > > > > >>
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > Please note that this group is for discussion
> between
> > > > > > users
> > > > > > only.
> > > > > > > > >
> > > > > > > > > To get support from AmiBroker please send an e-mail
> > > > > > directly
> > > > > > to
> > > > > > > > > SUPPORT {at} amibroker.com
> > > > > > > > >
> > > > > > > > > For other support material please check also:
> > > > > > > > > http://www.amibroker.com/support.html
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > Yahoo! Groups Links
> > > > > > > > >
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> > >
> >
>
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