Chart Advisor: Put Math on Your Side
By: Trent Smalley, CMT
In my previous post, I highlighted how artificial intelligence is being put to use in the world of technical analysis. Another discipline that marries well with technical analysis is statistics. In fact, when it comes to trading I would refer to myself as a quantitative technical analyst. Part of the bad rap technicals get is that they wouldn’t hold up in a more scientific sense. Those that aren’t well versed in technical analysis see it as a voodoo art akin to astrology or palm reading. Depending upon what aspect of TA they are talking about, I tend to agree. If you are a portfolio manager trying to raise capital in a room full of wealthy individuals and you mention your strategy centers around Gann Fans, moving average crossovers, overbought and oversold indicators, and Fibonacci Levels, you’re going to have a tough time. But what if you had statistics on your side such as win / loss ratios, profit and loss figures, and statistical significance of multiple strategies on your side?……….read more
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