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The Failure of Chart-Derived Systems |
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Inexperienced traders who rely almost exclusively on charts often find themselves drawn into dodgy trading situations and, ultimately, account liquidation. The reason that most chart-derived systems fail is that the charts themselves hide price action. While candlestick charts show all the highs and lows, that is certainly not the be all and end all. The technical indicator which forms the system is developed from price. The price action that translates through the indicator is very small. Therefore, the indicator severely lags behind the price action, displays false signals, or only shows those signals at the very end of price moves, just prior to a reversal.
Since technical indicators are quantitative, why do traders depend so heavily on charts? While a picture may be worth a thousand words, it is a lack of decent tools which keeps traders from working with a more favorable system, such as numbers.
To operate a numerical system, the trader must have access to tools that allow him to analyze trade data and act on it with split second timing. Until lately, such tools were outside the reach of traders. But thanks to technology, advanced system building platforms have come forward to fill the void and allow the average trader to construct quantitative system. Utilizing actual trade feedback and statistics from live and historical testing, even a trader with no particular attitude for math or programming can build professional-quality systems that steer clear of the hazards born of chart-derived systems.
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| Symbol |
Rate |
| GBP:CHF |
1.747703 |
| GBP:JPY |
155.484239 |
| GBP:USD |
1.638403 |
| NZD:USD |
0.627050 |
| EUR:CAD |
1.545998 |
| EUR:CHF |
1.516857 |
| EUR:GBP |
0.867915 |
| EUR:JPY |
134.947096 |
| EUR:USD |
1.421994 |
| AUD:JPY |
76.394373 |
| AUD:USD |
0.805000 |
| USD:CAD |
1.087204 |
| USD:CHF |
1.066711 |
| USD:JPY |
94.899879 |
| USD:SEK |
7.613010 |
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