A question about making money in the FOREX market - page 10
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He is 100% right about that. The TA does not make any demands on the raw data. It does not care about non-stationarity. Non-stationarity is relevant for statistical methods like regression.
But the question of uselessness of indicators is open. So, what should we use then?
The problem with technical indicators and the technical analysis in general is that they do not change their behavior depending on the object of study. Put MACD on a price chart - at times it will show divergence and convergence, going from positive to negative zone. Apply it to the most primitive SB chart - it will show the same patterns and will possess the same behaviour. The question is why should we believe this indicator, if it will give the same indications on obviously meaningless data?
The problem with technical indicators and all technical analysis in general is that they do not change their behaviour depending on the object of study. Apply the MACD to a price chart - at times it will show divergence and convergence, going from positive to negative zone. Apply it to the most primitive SB chart - it will show the same patterns and will possess the same behaviour. The question is why should we believe this indicator, if it will give the same indications on obviously meaningless data.
The problem with technical indicators and the technical analysis in general is that they do not change their behavior depending on the object of study. Put MACD on a price chart - at times it will show divergence and convergence, it will shift from the positive to the negative zone. Apply it to the most primitive SB chart - it will show the same patterns and will possess the same behaviour. The question is why should we believe this indicator, if it will give the same indications on obviously meaningless data.
Let's not raise the question of logicality or absurdity of TA - chatterbox.
I repeat the question - if not TA indicators, then what?
Stat methods have their fundamental flaws - have already been written about.
What is left - guessing the bones?
Although I believe the regression figures show the same result, I really like your reasoning.
It's a good test for any model, by the way. An ideal system will easily determine the randomness of prices and consequently the meaninglessness of trading on it. The model will not generate signals on such series due to their meaninglessness or at least it will reduce them to a minimum.
Stat methods have their fundamental flaws - written about already.
Let's not raise the question of logic or absurdity of TA - chattering.
I repeat the question - if not TA indicators, then what?
Stat methods have their fundamental flaws - have already been written about.
What is left - guessing the bones?
I am not denying TA, and I am not engaging in chit-chat. I was only talking about the applicability of specific TA and even more broadly, any model that tries to predict the market. If a model makes a prediction where it is fundamentally impossible, why should we trust that model where a prediction is possible but not guaranteed?
This, by the way, is a good test for any model. An ideal system will easily determine the randomness of prices, and consequently the meaninglessness of trading on it. The model will not provide signals on such series because they are meaningless, or at least it will reduce them to a minimum.
Could you elaborate on that point?
Sure. In particular the requirements for normality. How will you rely on the same error if it is only the average temperature in the floor?
In my opinion, in the first place we should refuse to optimise EAs at all.
Secondly, we should be skeptical of strategy tester (as mentioned earlier).
Third, trading in DC is just training or strategy testing in conditions close to reality, but that is not real.
Fourthly, it is better to deal with brokers, which have access to the exchange (here I did not reveal America).
"Stationarity" is not in quotes and regressions on them, but in other market functions.
In inverted commas - because it does not have to be stationarity in the statistical sense. Rather, it is in some sort of resilience.
If avtomat comes up with his ACS describing the market using linear difurcations with constant coefficients, that model would be no less acceptable than what you keep talking about.