T/A Absolutely Works!
Thomas Kee, President & CEO of Stock Traders Daily
Tuesday, December 22, 2015
The backbone of everything I have been doing for the past 16 years is technical and algorithmic. That focus has allowed us to thrive during the Internet debacle, and the credit crisis, and during the good times as well.
The notion that technical analysis does not work, as that was proposed in a recent discussion in this group, is not something that I can embrace. Technical analysis absolutely works, but it is not perfect. The author suggested that as it began to work a decision to leverage up was made, and then something happened adversely.
The leveraging up may actually may the problem. Leveraging up is akin to being greedy. That emotion has no place in this business, and technical analysis is explicit. Example: if support breaks get out!
Many people are not as disciplined as that, but there is another approach. We can use T/A to give us an understanding of underlying market sentiment, instead of a specific buy-sell trigger.
The process is simple. I have identified 139 stocks that I have come to know as being largely representative of the underlying sentiment in the markets, and every day I categorize them based on algorithms into either weak, neutral, or strong on a near term, midterm, and longer term basis.
That identifies near-term overbought or oversold conditions, which in turn offer us the opportunities to trade contrary to the market's direction with high degrees of probable accuracy.
Look at the Results of the Sentiment Table Strategy: +70% YTD, 20 Trades, 68% of the time in cash. That would be possible without T/A.
T/A has been the backbone of what I have done since essentially the onset of online trading, it is what helped us stand out during market crashes, and although the process requires a little more work, the beauty is that it can be used no matter what conditions surface, but you can't be greedy, you can't over leverage yourself, and when technical signals to exit your trade surface you must respect them.