When I looked at the setup instructions carefully for an Atlantic City simulation, I realized my work already incorporated whatever it is supposed to do.

A basic problem with statistics seems to be that there isn't an addressing methodology to catalog information. Not easy to explain simply - sort of a data rather than a mathematical issue. This problem is obvious if one looks at a quantitative finance text; there are tons of fascinating studies but they are generally too complex to be easily recallable at a later time.

For issues with a simpler example, take the standard deviation. That has great value as an example of data manipulation using Euler's number, but the standard deviation value is not very useful when applied to price movements. The information that standard deviation imparts can be derived more easily by other methods.

Other than the addressing methodology (sort of related to abstractionation - if that is a word) the main theoretical problem with statistics is time. Anything statistics does with time is questionable - standard deviation relies on taking the square root of time for example. Tell me how that ends well.

It's certainly taken me a long time to get to wherever I'm at with trading/investing/market understanding.

Lately I have been doing more portfolio analysis type stuff, concentrating on equities. One of the major problems with "normal" strategy design is that one is either long flat or short (an equity). Anything other than long equities for the last decade or so has been silly.

SPY, QQQ, IWM, XLI (and the other sector SPDRs) give a return equal to about the average stock in the particular universe - sort the universe by return and the ETF will almost always be really close to the middle. The idea is picking some combination of equities that exceed (hopefully) the return of the ETF. Commercial solutions can't handle this simple but hugely important task.

A really important thing that I realized a few weeks ago, is using natural log returns. Academics are agnostic on using natural log or normal (EndPrice / StartPrice) - 1 returns. There really is no question that natural log returns are better for algorithm designers. However, commercial backtesting structures always (I think) use trade listings with fixed investments to analyze performance rather than natural logs. That is because if you use a trade listing, you might as well use that methodology.

I prefer to make my own errors in design rather than have help.

This thread is kind of going of topic, so let's bump it back.

Took the words out of my mouth.

It would be much better to open a thread devoted to these side issues, or to find one that already exists. Keeping this one close to its topic, which is books on chart patterns and technical analysis, will make it a more useful thread for members who are interested in this sort of thing.

Books like Aronson's, which aim to show technical analysis does not work, are definitely on-topic because they are (a) books ( ), and (b) discuss technical analysis. Getting into the thesis of such books is fine as well, up to a point, but starting up discussions about the thesis and one's own views on the subject would be best continued elsewhere also.

So far, there have been no books listed in response to @TickedOff's original question, aside from the one that says it's not effective. Let's bump it back on-topic.

Thanks.

Bob.

I do agree the thread took a diversion, but I believe it was an important topic to diverge to. I was once that newbie trader who wanted to concentrate on 'everything' to do with trading vs. concentrating on one or several things that actually worked. We so desperately want to believe technical analysis works (because we have all heard of it) we don't for one minute seek out the correct evidence to support that it actually does.

...

So to bring this thread back to the pointy end, I don't recommended any books on technical analysis for chart trading, other than Aronson's book I mentioned. Whilst I may agree that trading stock chart patterns may have a sliver of potential greater than that for futures, most are bunk and fall into the category of statistical luck rather than skill.

I totally agree that if chart patterns worked all that well, then the authors of charting books should all be rich. But then, they wouldn't be writing books either, I think. But this applies equally well to anyone writing any books on trading: very few actual billionaires are also how-to authors, somehow.

Bob.

Best books that have helped you on technical analysis and chart trading?

I do agree the thread took a diversion, but I believe it was an important topic to diverge to. I was once that newbie trader who wanted to concentrate on 'everything' to do with trading vs. concentrating on one or several things that actually worked. We so desperately want to believe technical analysis works (because we have all heard of it) we don't for one minute seek out the correct evidence to support that it actually does.

The 2 authors @semiopen mentioned are the classic go to for chart patterns and Japanese candlesticks. These guys should be billionaires by all accounts.

Japanese candlesticks as an example were developed in the 18th century, do they have a place in today's market? Every trader in the world can see them and when they see them they react to them. These are the locations that institutions feast on, literally. Sure, you might get a win every once in a while...

Everybody remembers the single bearish engulfing candle that worked, but conveniently forget about the 3 others on the same chart that didn't. Institutions can run a million computations for every conceivable chart pattern and candlestick formation before your 1 minute bar is complete. Institutions and big banks love new traders for this very reason. They know what you are looking at.

If the OP @TickedOff really wanted to improve his/her trading, they should be concentrating on Volume. This is what moves (or doesn't move) the market. If you can go even part way to unlocking what volume does within the underlying market structure, you stand half a chance to at least become a break even trader.

Now of course this is my opinion. People will disagree. I could post my entire statistical analysis for the 11 items I listed, but even if the evidence presented was crystal clear that luck was actually the governing factor and not the indicator or chart pattern, it still would not be believed by some. Unfortunately, I won't be able to post my findings because as I mentioned I have a commercial interest in a venture that uses my analysis to seek out contrarian opportunities to them.

So to bring this thread back to the pointy end, I don't recommended any books on technical analysis for chart trading, other than Aronson's book I mentioned. Whilst I may agree that trading stock chart patterns may have a sliver of potential greater than that for futures, most are bunk and fall
into the category of statistical luck rather than skill.