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RE: TRADING: Moving Average Crossovers Useful? [PART 1/2]
Some insightful articles recently. I threw out TA a long time ago. I just trade price action, although I haven't really dug too deeply into quant tools. Thanks!
What is price action? Sounds subjective to me. The whole point is to eliminate subjectivity because the human brain cant process mathematical data, so we rely on machines and math to do it.
This would be the point of TA tools, but where they fail, quant tools prevail. You should check out quant tools.
Subjective, sure, but profitable. Price action is a naked chart with no indicators, based mainly on an abstract understanding of probability combined with time of day or month patterns and tape reading. I touched on the basics of quant tools at university along with some econometrics. You've definitely given me a nudge to pursue it further.
Well I am afraid those chart patterns are bunk too, i read research papers analyzing them and almost all of them had negative expectancy. Although if I remember correctly the
morning starpattern had positive expectancy, not big and only in stock markets, I am not sure.Besides it's hard to quantify, the human brain sees patterns where there isnt. Although you should look into the chart pattern research, I know a few papers have touched the subject:
https://arxiv.org/ftp/arxiv/papers/1111/1111.5892.pdf
https://arxiv.org/abs/1111.5892
But as I said, the candlestick charts give the illusion of patterns, that is why I use line charts. And I tend to rely more on objective analysis, rather than subjective, it decreases risk.
By patterns I'm referring more to behavioural patterns. Such as there's a big oil seller over settlement (2 min window)price comes off and then pushes back overnight.
As for chart patterns, they're contextual and I mainly trade gambits of info. Like if price is ranging between 5 and 10 it's more likely to hold if it quickly spikes to support or resistance rather then slowly pushing toward the highs or lows and slowly pushing out. All psychological of course, but you can see it on the chart and ladders.
But each to their own in trading, I think it's mainly about sticking to an approach that works with your personality and skillet.
Well as long a we are making money, who cares about the strategy right?