HFT firm traders, quants don’t use traditional Technical Analysis (TA).
If anything, quants and professional traders view TA as a joke, and the worst of them use it as a way to extract as much money from Retail Traders as possible, by making them think they’re being smart, using voodoo TA, while it actually just helps them Get REKT!
Don’t believe me? See here what Quantitative Algorithms Developer Coding Jesus had to say about why voodoo TA is garbage in this video he posted to his YouTube channel:
The thing is, the worst of the purveyors of all that trash TA are not limited to a small handful of people or companies.
Don’t just take my word for it. See for yourself what Hedge Fund manager Patrick Boyle said about the TA scam while being interviewed by anti-scam YouTuber Coffeezilla
It goes to the top of the trading industry.
Yay, even the purveyors of the biggest trading related platforms, be it charting services, popular YouTube channels, social profiles and blogs, and even the exchanges themselves, actively promote voodoo TA over any other type of trading system.
And some people wonder why 90% of Retail Traders lose 90% of their trading capital within 90 days.
It’s because the very tools that are supposedly intended to help traders trade better (and are heavily promoted as such), like Price based Moving Averages (MA), Exponential Moving Average (EMA), Stochastics (Stoch), Relative Strength Index (RSI), Fibonacci Retracements (Fib) and the like, are actually built on irrelevant maths at best, and generally terrible maths, if any at all. And many of the strategies and tactics they use, involve drawing completely random and subjective lines that have no statistical significance, boxes and shapes that they can just redraw whenever and wherever they want, to fit their narrative. Fibs are indeed amongst the biggest of the fibs in TA! Fibs lie practically every time, because they are completely subjective.
What the Pros actually use
It turns out, what quantitative algo developers and professional traders at HFT firms do to trade successfully as trading firms managing sizable, even vast amount of capital, is they trade volatility, probability and statistics, using tools built with proper math. That’s it. It is no secret.
Here’s a glimpse of some volatility indicators available to certain Retail Traders.
Ever since Messrs. Black and Scholes brought the innovation of the Black-Scholes model of using volatility, probability and statistics (and the consideration of Geometric Brownian Motion) to the market, professional options traders and scalpers have been using these math based tools to have a higher probability and lower uncertainty on their trades.
Where you can learn to trade volatility
There is a community called Alpha Trading, that is free to join and free to learn how to trade volatility. Among other places to find Alpha Trading, the group has websites including Alpha Trading HQ and others, YouTube channels including Alpha Trading with Live Streams (here’s one)
and Tutorial Videos, and a superb Alpha Trading discord server that hosts live chats and live streams (here’s another one of the live streams recorded and posted to the Alpha Trading YouTube channel)
where people can participate with the hosts, and where questions about trading volatility get helpful and useful answers from a superb group of friendly people who founded the community and voluntarily help other Retail Traders escape the clutches of voodoo TA by learning to trade volatility. I know this, because, full disclaimer, I’m one of them.
Are there free video tutorials to learn how to trade volatility?
Yes. There are free video tutorials (as written above) to learn to trade volatility, probability and statistics with proper math indicators.
Here is a tutorial video published on Alpha Trading’s YouTube channel, about how to use a set of volatility indicators called Moments, which is available for free on TradingView thanks to its publisher, BApig.
What other tools are available to trade volatility?
There are a good number of volatility related indicators and tools available for trading volatility. Alpha Trading shows its community (via the discord, videos, websites and more) exactly where to get the freely available indicators like the Historical Volatility Percentile, (HVP) Hurst Exponent (HE), Correlation Coefficient (CC), and plenty of others. And more importantly, Alpha Trading explains how to use each and every one of them, properly. In addition, Alpha Trading has some of its own volatility indicators available to members of its community. Here’s a chart with some of them.
And these tools are available on what is probably the most popular charting platform for Retail Traders, TradingView.
OK, is it REALLY possible to learn to trade volatility for FREE?
Again, Yes. You can learn it all, entirely for free. If you have the time and wherewithal and interest in learning how to actually trade like professional market makers and HFT firm traders, all of the knowledge you need, is available at no cost. Do not fall for fake gurus. Do not fall for voodoo TA. Do not look for shortcuts. There are none, aside from actually learning to trade properly. You have to learn, to know. It takes time. It is not impossible.
If you decide to try it, you can and most probably should try with “paper trades”, meaning trades using virtual money, so that you do not put actual capital at risk while you learn and will very likely make a number of mistakes as you learn a system that can seem quite counterintuitive or confusing at times, especially to anyone who has previous experience with voodoo TA and has that junk stuck in their head while they have to a new way of trading.
Do I need to be an experienced trader to learn to trade volatility?
No. You do not need to be an experienced trader in order to learn to trade volatility, probability and statistics using proper math indicators. In fact, I regularly see that it is often those who have no traded any junk system before, who get the hang of trading volatility, probability and statistics, easier than those whose thoughts have been poisoned by all the voodoo TA gimmicks.
And I say this not to denigrate voodoo TA traders. The average user of it, is, in my opinion, a victim of an elaborate ecosystem designed to convince them to use it, despite the fact that it is highly improbable to return positive returns for them in any medium or long term scenario. I was one of them. I used it, for a few years. And then I discovered just how bad it is. At the same time, I learned how great the potential is for trading volatility. By some coincidences, I had had a glimpse of and knew certain things about volatility, going back a good number of years, and just never really used it as my main system to trade. Once I realized its potency, I completely switched to trading volatility and haven’t looked back since. In my experience, the difference is night and day, and so I recommend learning to trade volatility.
Financial Legalese Disclaimer:
Do your own research. This is not carton folding advice. Nor is it financial advice. This is not any kind of financial solicitation. It’s just my opinion, based on my own research and experience, intended to inform you of what I have come to learn. You are responsible for your own financial decisions.