Is Technical Analysis self-fulfilling or self-defeating?

This is a discussion on Is Technical Analysis self-fulfilling or self-defeating? within the Technical Analysis forums, part of the Methods category; LOL - this has the potential to become an extremely philosophical thread. Which came first, the chicken or the egg?...

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Old Dec 9, 2010, 6:59pm   #11
 
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Re: Is Technical Analysis self-fulfilling or self-defeating?

LOL - this has the potential to become an extremely philosophical thread. Which came first, the chicken or the egg?
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Old Dec 9, 2010, 7:01pm   #12
 
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Re: Is Technical Analysis self-fulfilling or self-defeating?

It does not have to be one or the other.

Let's say someone traded based on the pattern made by the leaves in their tea.

They have the tea before trading and based on the leaves left, they draw horizontal lines above and below the current price. They go long at the lines below and short at the ones above.

When they first start, this system is not good. Over time, they persevere. They get a feel for that market, they get a feel for how much leeway an entry needs to give it chance to come good. They get a feel for how to manage the trade after entry. They get a feel for when to take a trade and when not to take a trade.

Eventually, they are profitable. They are consistenly making money on this combination of tea leaves and levels.

Now - what happens when this person attempts to trade without the tea leaves and why ?
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Old Dec 9, 2010, 7:02pm   #13
 
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Re: Is Technical Analysis self-fulfilling or self-defeating?

Quote:
Originally Posted by ThinkForexJB View Post
Which came first, the chicken or the egg?
Daddy chicken came first.

This is why mommy chicken is in such a fowl mood.
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Old Dec 9, 2010, 7:05pm   #14
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Re: Is Technical Analysis self-fulfilling or self-defeating?

sj8070 started this thread no my point is more ad extrema.

if every market participant in the whole world believed that the Pivot Point theory was 100% definite and accurate, then the market would jump discretely between these levels. thus the more a theory is propagated the more likely it is to be realised.

Therefore, in my humble opinion, if technical analysis is to have any value, one should choose the most popular indicators only
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Old Dec 9, 2010, 7:22pm   #15
 
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Re: Is Technical Analysis self-fulfilling or self-defeating?

If everyone believes the same thing, then you can't get filled. Since getting filled is necessary at some point if you want to make money, you will have to find a different way to enter from all the others. And you won't be the only one who needs to.
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Old Dec 9, 2010, 7:28pm   #16
 
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Re: Is Technical Analysis self-fulfilling or self-defeating?

Quote:
If everyone believes the same thing, then you can't get filled. Since getting filled is necessary at some point if you want to make money, you will have to find a different way to enter from all the others. And you won't be the only one who needs to.
So true...it is like everyone playing poker with the exact same strategy. If there is no variance and everyone is doing the same thing, the house is the only one that wins.
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