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> If someone says their algorithm relies on some sort of TA, run for the hills. Care to explain? I'm genuinely curious as I've had some success in this area. C

> If someone says their algorithm relies on some sort of TA, run for the hills. Care to explain? I'm genuinely curious as I've had some success in this area. Curious if I should be aware of something that I'm not...

pphysch 8y ago
Fundamentally, the history of a price has nothing to do with its future price. The laws of nature do not care if you are on a bull run. So TA is completely bunk in that regard. However, obviously many people do rely on TA, which means TA is influencing the price (you can beat their TA algo with your own TA algo). The problem is, you never really know what everyone else is doing. Relying on TA amounts to playing rock-paper-scissors, blindly, with 1000 opponents, and hoping you choose the winning move against most of them. Keep in mind there are only 2 outcomes, win or lose, and they occur randomly, so it’s really easy to fall victim to selection bias and think you have a winning TA-based algorithm.
- jmhyer123 8y ago
  Makes sense, thanks for the explanation.
- mathgenius 8y ago
  > Fundamentally, the history of a price has nothing to do with its future price. This is not true at all. Price movements show auto-correlation, for example.
thisisit 8y ago
TA indicators have number of flaws. One of the biggest flaws is that TA indicators tend to repaint. So an awesome winning MA crossover in hindsight might never really execute during real trading. Additionally using TA for trading also involves self-fulfilling prophecies. And if there are any markets which follow this prophetic tendencies - it is cryptocurrency.
pingiun 8y ago
Excuse me for being ignorant, but what does TA mean in this context?
- vinceguidry 8y ago
  Trend analysis. Kind of the first thing they teach you in tutorials, I think mostly because it's easy to convey. I could explain it here, but you're better off reading the Investopedia article. https://www.investopedia.com/terms/t/trendanalysis.asp https://www.investopedia.com/terms/t/trendanalysis.asp
  - omarchowdhury 8y ago
    They do mean technical analysis.
- deleted 8y ago
  [deleted]

pphysch 8y ago

Fundamentally, the history of a price has nothing to do with its future price. The laws of nature do not care if you are on a bull run. So TA is completely bunk in that regard. However, obviously many people do rely on TA, which means TA is influencing the price (you can beat their TA algo with your own TA algo). The problem is, you never really know what everyone else is doing. Relying on TA amounts to playing rock-paper-scissors, blindly, with 1000 opponents, and hoping you choose the winning move against most of them. Keep in mind there are only 2 outcomes, win or lose, and they occur randomly, so it’s really easy to fall victim to selection bias and think you have a winning TA-based algorithm.

jmhyer123 8y ago
Makes sense, thanks for the explanation.
mathgenius 8y ago
> Fundamentally, the history of a price has nothing to do with its future price. This is not true at all. Price movements show auto-correlation, for example.

thisisit 8y ago

TA indicators have number of flaws. One of the biggest flaws is that TA indicators tend to repaint. So an awesome winning MA crossover in hindsight might never really execute during real trading. Additionally using TA for trading also involves self-fulfilling prophecies. And if there are any markets which follow this prophetic tendencies - it is cryptocurrency.

pingiun 8y ago

Excuse me for being ignorant, but what does TA mean in this context?

vinceguidry 8y ago
Trend analysis. Kind of the first thing they teach you in tutorials, I think mostly because it's easy to convey. I could explain it here, but you're better off reading the Investopedia article. https://www.investopedia.com/terms/t/trendanalysis.asp https://www.investopedia.com/terms/t/trendanalysis.asp
- omarchowdhury 8y ago
  They do mean technical analysis.
deleted 8y ago
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