- What is so Special About the 200-Day Moving Average? The GLD Case December 23, 2011
The importance of the 200-day simple moving average as a trend indicator is well-known and indisputable. Even those who do not use technical analysis pay attention to this average.
- Trading is a Useful Zero-Sum Game December 17, 2011
There are two main issues with heated discussions one can find in trading forums about zero-sum games. The first issue is that most people believe that a zero-sum game is a useless one and its only aim is to redistribute ...
- Trading Based on Classical Chart Patterns is Modern Alchemy December 15, 2011
Medieval alchemy aimed, among other things, at the transmutation of base metals into gold. Trading based on classical chart patterns, like triangles, head and shoulders, pennants, etc., is a form of modern alchemy because it aims at the transformation of ...
- More on Games with Fancy Names that People Play December 12, 2011
Following the very popular post of last week on Games with Fancy Names, today I have a new game. A biased coin will be tossed 1807 times. The coin bias is only 51.96%, meaning that on the average, heads will come ...
- Games with Fancy Names December 9, 2011
Someone asks you if you would like to play the following game: A biased coin will be tossed 1778 times. The coin bias is 54.78%, meaning that on the average, heads will come up 54.78% of the time. You win $85.50 each time ...
- Is Chart Analysis Modern Alchemy? December 8, 2011
Recently there have been many chart pattern failures in several markets. One must be very careful with chart analysis because the market rarely rewards predictions that are obvious to anyone with a book on technical analysis and a personal computer running a charting program. Examples ...
- Reality Says I Do Not Need to Defend Myself December 1, 2011
Reality provides the ultimate test of all ideas. Since Monday of this week, the DJIA has gained 813 points or about 7.42%. But someone could claim that a recent call for Dow dropping to 4,000 by a well-respected analyst regarded only the longer term. Well, my ...
- Dow 4,000? What Technical Analysis Says or Doesn’t Say About Such Possibility November 26, 2011
Recently I read an analysis about the possibility of Dow dropping to 4,000 or even as low as 1,000. The claim was that technical analysis of long-term charts supports such a possibility. I argue here that it is not pure technical analysis that ...
- Probability is Common Sense November 2, 2011
This is another post on the defense of common sense. In my opinion some preconceived ideas about probability and risk often attribute some common sense decisions by humans to lack of rationality. Here, I comment on a recent example from another blog. The following is ...
- Optimal Position Size Methods and Other Misconceptions August 26, 2011
Optimality usually refers to a solution to a problem derived with respect to some objective function.
