Will you be kind enough to point to an indicator/pattern/system that
doesnt work of historical data. Probability inherently depends on past
behaviour to predict future outcomes and there is no other way around it
except if we are able to formulate an equation complex enough that can
take all variables that affect the market and come up with an output.
Since price, volume and earnings are the lowest common denominator
in almost all the thousands of variables that impact the moves, they
are considered as an approximation good enough for current understanding
and compute power to get the probability.
Cheers
Pankaj
For ex: We all know that 'past performance is not a guarantee
of future performance'. Inspite this, you find a vast majority of traders
using moving averages. My purpose is not to criticize anybody's moving
average trading system. Buy using moving averages, we are forming a
subconscious assumption that price will behave as it has behaved in the
past. Since our assumption is wrong or rather not always correct, a trading
system which is based on that assumption will automatically inherit the
flaws.
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