Technical Analysis and efficient capital markets?

[CosimoMedici]

Hey everyone,

Automated trading involves technical analysis. But all the finance professors say that technical analysis does not work. If that is true, then most automated trading strategies should not work.

I am just wondering if anyone here actually has a profitable strategy, either automated or discretionary, that uses technical analysis?

Before I put any more effort into this and defy my finance professors, it would be nice to hear from a few people who are successful at this.

You dont have to tell me your strategy or how it works, just let me know if you actually have one that is profitable.

[MXASJ]

Are you sure your thesis is correct?

Automated trading involves technical analysis 

That is not a given

all the finance professors say that technical analysis does not work 

Many, yes. But all?

then most automated trading strategies should not work 

If the assumptions are incorrect, the conclusion is suspect.

Take a look at Lo and MacKinlay (1999). You could use the same math on the most recent 20 years of data. Probably a good paper to write if your premise is that market microstructure and the information rate has changed since that book was written.

Happy hunting!

[Oil_Trader]

Technical Analysis:: subjective

Automated/Quantitative Strategies:: objective

Most automated strategies were derived from technical analysis via visual learning. Then, visual learning is applied into machine learning using advanced tools such as NinjaTrader.

Both can approach work profitably:

IF ((Trader == Disciplined) && cutsLosses).
THEN System = Profitable;
ELSE Trader = Professor ;


the difference between theory and practice is that:

In theory, there is no difference between theory and practice.

In practice, there is.