I understand what you are saying and I understand and use a variety of pattern recognition and other techniques in my trading, but I'm not sure I understand WHY they work and frankly I don't care ... Instead I'll contend that proper testing of techniques go a long way to letting one know whether or not ones techniques are likely to work at the hard right edge.
--- In [email protected], "sebastiandanconia" <[EMAIL PROTECTED]> wrote: > > 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 [email protected], "Fred" <ftonetti@> 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 [email protected], "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 [email protected], "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: [email protected] > > > > 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: [email protected] > > > > > > > > > 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 [email protected], 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: [email protected] > > > > > > > > > > > > > > > > > > > > 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 [email protected], "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: [email protected] > > > > > > > > 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: [email protected] > > > > > > > > > > > > > > > > > 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 [email protected], "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! 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