Technical analysis "debunked" article

This is a discussion on Technical analysis "debunked" article within the Technical Analysis forums, part of the Methods category; I read this article on the subject of TA with great interest this morning but would be interested to hear ...

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Old Feb 16, 2012, 2:07pm   #1
 
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Technical analysis "debunked" article

I read this article on the subject of TA with great interest this morning but would be interested to hear the views of some others on here as to the validity of it's arguments.

Technical Analysis Debunked: 5 Reasons why we don't believe in Charting - Yahoo! Finance UK

I'm very much a newbie having read a few books on TA and Spreadbetting strategy (Malcolm Prior's book the name of which escapes me just now) and am just at the stage where I'm beginning paper trading some of the methodologies which I've been studying before risking any capital.

I've been genuinely taken aback at the ridicule that the author and some of the comments seem to be directing at TA in general

Any thoughts?
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Old Feb 16, 2012, 2:27pm   #2
 
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Re: Technical analysis "debunked" article

Youz gone get lynched up in herr homie.
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Old Feb 16, 2012, 2:41pm   #3
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Re: Technical analysis "debunked" article

I'd say it was 100% correct.

In my experience (which is considerable), I cant ever recall having met a single trader who uses TA succesfully who actually believed that TA was predictive. Furthermore, I cant recall having met a single academic who who didnt believe it was predictive !

I'd advise grabing a copy of David Aaronsons book Evidence Based Technical Analysis, and you'll undertand where that article is coming from.

The article is 100% correct, but dont let that fool you into thinking TA doesnt work, because it does. The problem is, most people are not capable of determining when its working or not working (thankfully)
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Thanks! The following members like this post: Lord Flasheart , trendie
Old Feb 16, 2012, 2:52pm   #4
 
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Re: Technical analysis "debunked" article

BDT279 started this thread Cheers Hare. Think I know where you're coming from... I'd agree TA isn't predictive but if it can be used to simply give you an "edge" as to how a security is likely to move, when employed alongside careful risk management your hope would be in the long term that your wins outweigh your losses. That's the theory anyway
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Old Feb 16, 2012, 4:55pm   #5
 
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Re: Technical analysis "debunked" article

This one on the same subject is also good:

Trading Based on Classical Chart Patterns is Modern Alchemy | Price Action Lab Blog
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Old Feb 16, 2012, 6:07pm   #6
 
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Re: Technical analysis "debunked" article

The first article in itself doesn't really do much debunking though does it? It's just a list of anecdotal evidence/opinion.
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Old Feb 16, 2012, 6:40pm   #7
 
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Re: Technical analysis "debunked" article

Quote:
Originally Posted by the hare View Post

................... I cant ever recall having met a single trader who uses TA succesfully who actually believed that TA was predictive. Furthermore, I cant recall having met a single academic who who didnt believe it was predictive !..........
Never truer words were spoken . All TA does is give you a "reason" to make an assumption (if you're not making your assumption from a random numbers book, of course ) and the hard work starts after that.
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Old Feb 16, 2012, 7:34pm   #8
 
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Re: Technical analysis "debunked" article

BDT279 started this thread The Alchemy article at least seems to give a fairly balanced discussion whereas my feelings on the first was that the author had made his mind up before writing it.

I suppose perception as to whether TA works or not has a lot to do with the expectations of anyone coming into it. If you expect a 95% success rate and see it as a get rich quick/easy scheme then you're going to be disappointed. If you see it as a way to gain an edge to tip the odds in your favour in the long run then it's a more than useful tool.
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Old Feb 16, 2012, 10:42pm   #9
 
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Re: Technical analysis "debunked" article

I think it depends on what you mean by "work".
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Old Feb 17, 2012, 12:09am   #10
 
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Re: Technical analysis "debunked" article

Quote:
Originally Posted by BDT279 View Post
If you expect a 95% success rate and see it as a get rich quick/easy scheme then you're going to be disappointed.

And its not? Damn it pinky - had my last 10 on that one
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