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Don't you think there is a reason that "technical analysis" is not a discipline of financial mathematics as a science? That should be a strong indication to you that it is just hokuspokus that does not hold up to any rigorous analysis (other such examples are the "Most Haunted" shows and similar).

 

Although I completely agree on the fact that TA is completely made up (but not as much as Astrology!), I believe it works because... Most of traders believe it works.

As a consequence, they end up shaping, to a certain extent, the reaction of markets to match TA's (sometimes artificial) rules.

 

On the other hand it provides some observations that, although impossible to demonstrate due to the complexity of the system it analyses, give one a rough idea of the momentum and variation of risk in shorter term.

 

Now, it's no substitute to proper mathematical finance application, but even that can fail.

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... I believe it works because... Most of traders believe it works.

There might be a certain "self-fulfilling prophecy"* effect. However, put to a statistical test, I would believe, none of the EWT stuff etc. would work - it's simply too unspecific, too rubbery. Also, usually, if there is a way to make easy money and everyone knows about it, the "way" or the "easiness" will pretty soon disappear.

 

Fundamentals will always rule in the end.

 

* Funnily enough, this notion ("self-fulfilling prophecy") was invented by sociologist Robert K. Merton who is the actual father of one of the 'founding fathers' of modern financial mathematics: Nobel laureate Robert C. Merton (Black-Merton-Scholes Formula, Ito calculus in Fin.Math.)!

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Indeed :) There is no foolproof method and we're all using intuition and guesstimation (be it from "looking at charts" or "watching the news").

Just because you do not know the future with 100% certainty,

it does not mean you are "just guessing" with the accuracy of a 50/50 wager, such as coin flipping.

 

If you develop a technique which can improve your accuracy from a random 50/50, to a useful 60/40,

or a very useful 70/30, then you have an "economic edge" which can allow you to beat random chance,

provided you manage your money with discipline.

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Just because you do not know the future with 100% certainty,

it does not mean you are "just guessing" with the accuracy of a 50/50 wager, such as coin flipping.

 

If you develop a technique which can improve your accuracy from a random 50/50, to a useful 60/40,

or a very useful 70/30, then you have an "economic edge" which can allow you to beat random chance,

provided you manage your money with discipline.

 

 

This may have had something to do with it..

 

http://www.zerohedge.com/news/silver-plunge-explained-shanghai-hikes-silver-margins-15-18

Silver Plunge Explained: Shanghai Hikes Silver Margins From 15% to 18%

We wonder if the collapse in silver price yesterday may have been due to just a tiiiiiiny leak of the fact that overnight, the SGE announced an imminent margin hike.

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Just because you do not know the future with 100% certainty,

it does not mean you are "just guessing" with the accuracy of a 50/50 wager, such as coin flipping.

 

If you develop a technique which can improve your accuracy from a random 50/50, to a useful 60/40,

or a very useful 70/30, then you have an "economic edge" which can allow you to beat random chance,

provided you manage your money with discipline.

 

Forgive the rarity of my postings though I do lurk and enjoy reading many postings. I think you have nailed it accurately there DB.

 

Successful trading is not looking for perfection, as it is not attainable, but merely to improve the win loss ratio. In fact even if you have a win/loss ratio of 30:70 you can trade successfully if your money management is good enough. Merely a matter of making sure the wins are big and losses are small (easier said than done of course). I think your constant reminders that "Anything can happen" is absolutely vital for traders and is what makes money management so important.

 

I'd love to see more discussion on maoney management and position sizing.

 

If this is in the wrong thread please move it to the trading thread or wherever suitable.

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I'd love to see more discussion on maoney management and position sizing.

 

 

Just start a new topic on the main board, I'm sure others would like to have a thread to discuss this on GEI...................

 

I started trading futures in March, in a 6 month period my win rate was only 33%, but I still made a profit (even with a money management strategy that really wasn't suited to the market and timeframes I was trading)

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There might be a certain "self-fulfilling prophecy"* effect. However, put to a statistical test, I would believe, none of the EWT stuff etc. would work - it's simply too unspecific, too rubbery. Also, usually, if there is a way to make easy money and everyone knows about it, the "way" or the "easiness" will pretty soon disappear.

 

Fundamentals will always rule in the end.

 

* Funnily enough, this notion ("self-fulfilling prophecy") was invented by sociologist Robert K. Merton who is the actual father of one of the 'founding fathers' of modern financial mathematics: Nobel laureate Robert C. Merton (Black-Merton-Scholes Formula, Ito calculus in Fin.Math.)!

I think you have to see its value from the returns generate by those who use TA.

 

It is a tool afterall, not a phenomenon all on its own. So you have to look at the tool in the hands of someone who knows how to use it.

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There might be a certain "self-fulfilling prophecy"* effect. However, put to a statistical test, I would believe, none of the EWT stuff etc. would work - it's simply too unspecific, too rubbery. Also, usually, if there is a way to make easy money and everyone knows about it, the "way" or the "easiness" will pretty soon disappear.

 

Fundamentals will always rule in the end.

 

* Funnily enough, this notion ("self-fulfilling prophecy") was invented by sociologist Robert K. Merton who is the actual father of one of the 'founding fathers' of modern financial mathematics: Nobel laureate Robert C. Merton (Black-Merton-Scholes Formula, Ito calculus in Fin.Math.)!

 

Perhaps I'm mistaken but algorithmic trading - by definition - must be technical in nature (ie. based on rules or heuristics). With the dominance of such trading it seems that the short-term trader has no choice but to pay strong attention to technicals. The prevalence of fibonacci retracements, for instance, is incredible, including in the long-term gold charts (cf. Alf Field).

 

I think at some point (perhaps in Elliott's time), there were emergent phenomena that could be observed in markets. When the algorithms began to arbitrage every one of them away, we're left with purely self-fulfilling prophecy. The end result is chaotic high volatility isn't it, due to the market being one big feedback loop dominated by computers.

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My main forecast for the past years has been: "gold & silver will go up a lot". I was 100% correct with that.

 

Don't you think there is a reason that "technical analysis" is not a discipline of financial mathematics as a science? That should be a strong indication to you that it is just hokuspokus that does not hold up to any rigorous analysis (other such examples are the "Most Haunted" shows and similar).

 

On another note, allowing myself a little superstition, I do see James Turk's MASSIVE 30+ years cup & handle in silver. :) He is going to be right on that one.

Here's something that I think is "akin to astrology"

 

"$1764 is the level where Gold will take off!"

 

Well, no!

$1764 was a warning that an important top (but maybe not THE top) was about to be put in place.

 

My own approach to TA, and the discipline in applying it gold and silver is work better

than the "angels and voodoo" that Mr Sinclair is using on Gold and on his TRX stock

 

Having said this:

JS usually has some interesting things to say in an interview,

though he puts equal confidence in his sense and his nonsense

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"$1764 is the level where Gold will take off!"

 

That was not the quote

$1764 is the level at which gold "could" go exponential was what was said

It was also said in other interviews that $1764 would be a long drawn out battle

which it has proven to be

As with MF Global when the paper ponzi collapses many people

like Celente will be left holding paper promises

There is nothing safer than buy and hold

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Yes, $1764 merely signifies the level where above that number we get HUGE volatility and a possible launch to higher levels. Sinclair made this quite clear.

 

He also made it quite clear that the price would go below the 'angels' and that battles would take place around those important levels.

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James Turk's $75 Silver at year end isn't looking very likely, unless there was a misprint or glitch on a sound recording and he actually quoted $25.

i think of him, kindly, as a man way ahead of his time.

 

is a buying opportunity for silver coming up soon? i was over optimistic about the extent of the silver decline, it seemed, so i will be interested within a few percent of the low. i swapped back some gold to silver recently on the day that the greeks called that referendum which never happened and the markets dived, but did not commit any actual new cash. i would be interested in putting more money in at the right price.

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I couldn't bring myself to add to core silver holdings unless it retested the recent lows of $26/27, a price I would be quite confident in it reaching in this catastrophic climate.

yeah, still too much stupid money in here bidding it up at the slighetest weakness. well, these reserves will be exhausted eventually and then our chance will come.

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Although I completely agree on the fact that TA is completely made up (but not as much as Astrology!), I believe it works because... Most of traders believe it works.

What other traders speak of these long term MA's that I use ?

== ==

 

Another leg down in Silver? - It is possible

 

SLV / Silver etf ... update : 1-year : 6mos-wo-610d

 

slv21nov.gif

 

SLV is now testing the 377d, just below $30.

 

If that breaks it may rattle down to $25-26, where the 610d MA would lend possible support.

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Silver Forecast to Surge to $450 and Gold to $12,000

http://www.marketoracle.co.uk/Article28118.html

Silly forecasts from May 13, 2011.

Thanks for the link, HG, to show how people got carried away then.

 

Possibly acted on by naive sheeple, unaware of technical analysis,

and that forecasts get progressivly sillier as prices rise.

 

Now a forecast of "Silver to hit $44 in Q1-2012" would seem a tad aggressive.

 

I find it strange how some here have ridiculed my (sensible) comments here, or rubbished my idea of swapping Silver for calls, to take some profits off the table. (Perhaps those foes-of-practical-sense have now moved on, or will show more respect for my conservative way of trading?) But it may be that when the next important lows come, we will only have a handful of folks who are still long-term bullish on Silver.

 

Remember those on other sites (like Goldseek) who were saying you should NEVER SELL your gold or silver? Do they still have a following there?

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Silver has become quite cheap again. I haven't bought more metal recently and was focusing on the miners, but I am somewhat tempted.

 

It seems the massive downward trend in the G:S-ratio since 1990 is still intact.

 

(I still can't believe how I nailed this chart a few years ago... :) )

 

http://gold.approximity.com/gold-silver_watch.html

Gold-Silver-Ratio_GUESS.png

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Silver has become quite cheap again. I haven't bought more metal recently and was focusing on the miners, but I am somewhat tempted.

 

It seems the massive downward trend in the G:S-ratio since 1990 is still intact.

 

(I still can't believe how I nailed this chart a few years ago... :) )

 

http://gold.approximity.com/gold-silver_watch.html

Gold-Silver-Ratio_GUESS.png

Isn't it time for another red line on that chart, almost verticle, taking the ratio down to 20 or below??

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What other traders speak of these long term MA's that I use ?

== ==

 

Another leg down in Silver? - It is possible

 

SLV / Silver etf ... update : 1-year : 6mos-wo-610d

 

slv21nov.gif

 

SLV is now testing the 377d, just below $30.

 

If that breaks it may rattle down to $25-26, where the 610d MA would lend possible support.

I'll be a buyer/ trader of silver in the high 20s.

 

Of course, still happy with the core silver bars bought and held since 2008. Its purchase price would have doubled.... even with silver back down to 26.

 

At a slightly later date, I moved most of my other core bullion [in paper/ goldmoney] out of silver into gold... as I perceived gold to be more stable and "safer" in volatile markets. Also, raised a reasonable dollar position here "the hedge".

 

Also at that time, I retained a small token trading position in silver, and exited this into dollars being uncertain of the silver market.

 

 

 

I guess the "difficulty" with this thread is whether it should be treated akin to the gold thread... with its rightful bias towards buy and hold, or not. Silver has shown herself a lot more volatile than gold as a few predicted; there's a good chance that instead of "leveraging" the rise of gold, silver may just rise at a similiar rate though being way more volatile to the upside and down. These criticisms of silver often irritated the silver bulls who tended to subscribe to the simple view of silver as a leverage on gold [not to mention mining stocks].

 

Possible options to make this site a more congenial one to all users could be:

 

1] Keep this thread with a buy and hold emphasis, and open another thread on silver with a trading emphasis. Problem then may be that there come to be too many threads.

 

2] Open up this thread more to ideas on trading silver, and move the buy and hold emphasis on bullion solely to the gold thread. That way, those only interested in buy and hold would treat silver and gold similarly on the gold thread.

 

A mistake I made early on was discussing the trading of silver /the hedging of gold etc on this thread. This only led to misunderstanding... as if I was not also interested in buy and hold, and as if my trading position, high-lighted here, had anything to do with my core bullion positions elsewhere. Opening up my own "Trading Volatility/ Silver" thread helped to avoid further confusion.

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