Is technical analysis bullshit?
I don't see how the price development of the past has any influence on the future. I can imagine some indicators becoming self-fulfilling prophecies (like many people believing in Fibonacci levels and thus acting the same way) but to me it screams like bullshit. This is especially true for the Forex. The Forex is very liquid and appears to be just perfect for technical analysis but prices develop because of international interactions of gigantic scale.
Yeah, I did/do. The reason why I'm wondering if because I traded manually and the other day I went to a conference where a bunch of autists were trying to sell their 'Expert Advisors' (fancy name for trading bot). When asked how their autism trader 2.0 decides to act, they all went that it's 'high speed technical analysis'. I'm a bit torn, I could program my own bot but it sounds fucking retarded.
Price action + volume is very, very reliable
Price action + volume is technical analysis
Therefore, technical analysis is not bullshit
Price action + volume + MACD = can predict the future
By itself yes. But it's always meant to be 2nd to fundamentals. So if you find a company that's good and you're ready to buy use technical analysis to find a better time to buy than whenever
lots of technical analysis is bullshit, especially the subjective stuff
but it is a broad area and you could argue that it encompasses any analysis of price data in which case there are plenty of people out there using 'technical analysis' to make a lot of money... thought they might not refer to what they do as technical analysis and it might not be too familiar to the usual stick lots of indicators on a chart/statistics made easy approach taken by the typical mug punter...
that sort of stuff is retarded, if you've found an edge then the best way to make money from that edge is to trade it... not sell your system for a few dollars to a few hundred small time traders at a confrence
I've never tried forex or trading but I have a question. With stocks, the upper price barrier is infinity and the lower barrier is zero. Obviously stocks find it easier to go down.
With forex, let's say usd/EUR, there's nothing "natural" about which way it'll go. It still fluctuates like a mothrrfucker when there are big macro trends.
So how is it not an almost guaranteed win in forex if you let your wins run and you pu stop losses?
I'll tell you. I was stationed in Japan, amber one of the women at the church I went to told me how she was thinking "the USD would ALWAYS go up " so she was exchanging her savings...around when USD.JPY was 360
so don't get married to certain Forex limits. Remember the poor bastards Thai were BTFO when the Swiss played their game earlier this year
Technical analysis is all about annotating charts with Hindsight Genius, explaining how major cash could have been made by simply buying at the very low and selling at the very top, selling this idea to a bunch of pikers, and profiting big time.
So yes, technical analysis can be very profitable. I mean, who doesn't like looking at a bunch of coloured thingies and oracle-like hindsight banter?
OK....because you are a rookie and you make dumbass statements, here are your little GS "TECHNICAL" charts to look at. I urge you to cease wearing brony buttplugs and have the holes in your earlobes surgically repaired. Remember not to wave your tiny dick around when making outrageous fucking statements like this:
>evidence? pretty sure its never used in institutions
i can tell you're passionate about TA and probably good at it. what puzzles me is why you continually defend it in every thread that shitposts about TA. most people don't really understand what it is. i'm assuming you're the same guy that gets riled up in every thread.
all the common arguements in each thread including this one is dispelled in the first few intro chapters of any comprehensive book on TA.
biz shits all over TA but gambling on penny stocks is A-OK. penny stocks are pure gambling. at least TA there is an understanding, by the horribly uninformed opinions of people, of loose price targets.
every board has a subject matter that provokes autism. you go to any other serious trading board and TA accepted as any other prediction tool. people who aren't autistic NEETS (like most of 4chan) realize it has it merits and failures.
i think you should give it a rest trying to win people over to TA. some people are willingly ignorant.
They all love to sit there with their little charts and bars and act like they know the future. I've watched some different youtube videos and promotional material of companies trying to sell their nonsense. It's hilarious and also really easy to do when you use the same analysis to show how you could have made millions via captain hindsight.
The swiss stopped their currency peg abruptly. It took one of the largest forex trading companies down with it. I owned FXCM at the time to profit off forex morons and even I took a hit for being anywhere near it. Lesson learned. That just goes to show you, no technical analysis in the world can predict an unpredictable world without inside knowledge.
Even the best forecasters are at a statistical average of 50/50. Literally a coin flip.
Forex? Forget it. 85% of traders lose money and that's being conservative. Nothing wrong with gambling just don't kid yourself thinking you can beat the house with colored bar graphs and charts.
TA is strictly for entry and exit points in a trade. There are many common chart formations which are very helpful for traders to enter and exit trades. It's not BS, it's just a tool for timing.
If you look at the oil on a short term chart. You can see pennant forming. Price has been banging around between 43-48 bucks...if the oil breaks 48 and closes for 2 consecutive days above that level it's good confirmation to go long on the trade and let 48 be support.
You seem to be suggesting that you only use TA to supplement decisions based on fundamentals. It seems to me that TA is used mostly in shorter-term trades and that the shorter-term you get, the harder it is to trade on fundamentals unless you think you know what's gonna happen next week that other people don't.
If you were trading longer-term on fundamentals, I don't think you'd use TA very much, right? Is it accurate to say that TA is more useful the shorter-term you get vs fundamentals, due to lower frequency of relevant news / fundamentals events as you get into a finer and finer timeframe?
The ideal environment for TA would seem to be a stock where the fundamentals never change, but no stock or security is really like that. Even when nothing happens directly relevant to a stock, news is coming out relevant to other companies and actors that impacts that stock...
Support and Resistance is a self-fulfilling prophecy. It can fool you. A very large institution might see a support and say
>"people think this is support, let's do the opposite and sell billions."
>"then they will panic and they will sell too, and when they do, prices will go down further, and that's when we buy big at a big discount."
On the other hand, price action and volume don't lie. Prices going up are prices going up. Large volume is large volume.
So, back to the institution, so they buy big at a big discount right? That's when guys like me see big volume and prices going up, that's when I buy, together with the big institutions. they make big money, I make big money, you lose.
TA isnt bullshit
indicators are bullshit, MACD, RSI, all that dumb dumb. fight me.
what those indicators are good for are scanning for extension in one direction or another, not entries and exits
the smaller the market, the more effective TA will be
Example: Some years back (2002) the price of natural gas began to increase "despite the fundamentals" of there being measurably more supply than demand. The price of natgas began to climb above a 20 day average. "Technical" traders saw that rally above the 20 dma and began to buy natgas. Nothing in the press or in gov't reports generally circulated among traders and marketers suggested , fundamentally, that one should buy natgas as a bullish speculative investment or trade. Finally, a month later, a major investment bank wrote its clients that a nuclear plant in Ohio had a radioactive leak. Another 60 nuclear plants in the US were built using the same methods as the leaking plant. When the nukes go down, the utilities that own them buy natural gas to make electricity that the nukes would have made. (It's about 200,000 mmbtus/day on average.) So, figure 200,000 mmbtu/day X 60 utilities in the US. Well, that's what utility fuel buyers were doing. They kept that news to themselves.
Word had spread among utility people via the contractors who work on nuclear leaks that "there was a chance" that an enormous "fundamental" (60 nuke operators all wanting spot gas daily for more than a year if they had leaks, too) would cause a shortage of spot gas and the market went bullishly higher.
So, technical price action in its simple state warned every technical analyst watching the price of natural gas that some thing unknown and bullish was "out there". And the investment bank that figured it out an announced it was Goldman Sachs.
Some general info about the plant that started it all:
>they trade depth of markets if they're going to "trade"
"depth of market" is technical analysis. The order stack is studies compared to other stack level volumes posted. (Watch out for spoofers.)
Technical means "comparison".
Some of the the smartest engineers, bankers, traders and lawyers in the world stood on the dock and laughed their asses off at Columbus as he set sail looking for a "round" world and a western passage to India. Technical analysis made Columbus trip possible.
The problem is what passes today as TA. I shit you not, there are people who legitimately use astrology in trading and call it TA. Some other stuff is just a self fulfilling profecy, other stuff (MAs, mostly) have no intrinsic property, but simply are used to gauge the price without noise and see if a security is cheap or not, but so many people use them that they end up acting as dynamic levels.
That being said, i still think TA doesn't work, since TA levels are obvious and banks have access to algos to regulate order flow. Your stops get hit, since they know where they are, and they make money.
I lost one year dabbling in TA until i decided to get into algo trading and never looked back. I suggest people willing to listen to do the same.
And and forget about FA. I regularly have access to fundamental reports issued by institutionals, and they end up being wrong, so many times that it's embarrassing.
you realise that is marketing... not that you wouldn't see TA charts etc... on a trading floor at all - though perhaps more so in commodities rather than rates etc.... it isn't really as useful as the average retail trader assumes it is.
>you go to any other serious trading board and TA accepted as any other prediction tool.
nah - perhaps true if you go to elitewanker and trade2win etc.. which are mostly populated by retail traders
but if you go take a look at wilmott for example where most of the posters are professional quants/traders and it isn't exactly blindly accepted, only parts of 'TA' are deemed useful
pic related, how the stock market works
now that prices are low people are panicking and selling instead of buying
that's why dumb goyim will never make it
i however make money thanks to my supreme intelligence
of course past performance will never tell you about the future of a company, every single book on value investing - if it's worth its money - will tell you that momentum is the last thing to base long term investments on
however, fundamentals or technicals can tell give you a good glance at how over/under valued a stock is, whether it's trading above/below book; how the company is handling their debt and how they measure up to their competitors
if you're serious about investing at all then you download at least 7 years worth of sec filings and look through the company's management and its history
is this a company that you would like to own? does the management clearly set out their goals and do they accomplish them? If they dont, are they honest about it?
i dont know too much about growth investing but these types of questions have helped me a lot in types of value investing
It isn't bs, pretty useful data if you know what you're doing. There is a learning curve to it though. Technical analysis, fundamental analysis, money management, and self discipline/control when used together can be pretty powerful. Psychology plays a huge role in trading. Once you open a position, let the market do its thing. It will go up, it will go down. A lot of people take unnecessary loses because of closing a position to early out of fear or tight stop loses. Basically giving money away, let the market breathe. Trading isn't easy and it isn't for everyone. The people who say technical analysis is bs, probably got their asses handed to them by the markets. Self educate, nothing in life thats actually worth it comes easy. Like everything else in order to succeed you have to take risks. Many fail and give up early, probably due to over trading and unrealistic expectations. Trading or investing isn't a get rich quick scheme.
1) Lots of "analysts" use technical analysis
2) This implies a lot of them will be using similar analysis to calculate ideal buy/sell/stoploss etc levels (resistance/support)
Thus trading on technical analysis works as a self-fulfilling prophecy. As long as enough people believe it works and act upon it, it will actually work in reality.
So yes, if you use technical analysis to figure out when big traders are going to buy or sell you can make money off that in any market. All you need to do is spend approximately 1000 years to teach yourself the finest details of a market of your choice.
Not at all.
It's best used to get a cue on insider trading or advanced information for example. When the trend breaks with volume to match, it's usually a case of some fundie/smart money knowing what's up.
you don't have to be a TA buff to reject that
you'll find that asset classes with clear links to each other are quite efficiently priced in line with each other due to obvious arb opportunities
but that doesn't negate the idea that there can be big inefficiencies out there - or indeed regular small inefficiencies that HFT firms can take advantage of