Does technical analysis work or not?

[tomorton]

Hi Guys,

My first post and I find this an intriguing topic. I would just like to echo those who said or meant that the meaning of " work " for TA can be a very nebulous one.

I would however say that most of TA is not calculated objectively and that is the main issue I have with it though this says nothing about whether it works or not .

This is all very relevant. If we can't define what we're looking for we'll probably never all agree whether its been found.

It looks like most new traders (who comprise the bulk of losing traders) mis-use TA rather than use it. Even when its used properly, there will still be traders who don't make a profit from TA and that will so often be due to poor money and risk management.

 

[barjon]

This is all very relevant. If we can't define what we're looking for we'll probably never all agree whether its been found.

It looks like most new traders (who comprise the bulk of losing traders) mis-use TA rather than use it. Even when its used properly, there will still be traders who don't make a profit from TA and that will so often be due to poor money and risk management.

Agree with that, Tomo. TA is just a tool and asking if it works is like asking if a violin works, or if English works.

 

[EnlightenedJoe]

Agree with that, Tomo. TA is just a tool and asking if it works is like asking if a violin works, or if English works.

We can ask a violinist to play a tune. We can ask a playwright to do us a play. Why can't we ask a TA person to make money ? Is it because it is impossible ?

 

[foroom lluzers]

Does TA work?


the biggest problem with TA is..

There's waay too much of it.

However, I will go as far as to agree with you that 80% of TA has little value. I will also agree that this business provides an excellent opportunity for those who are expert at marketing but couldn't trade in a million years.

Most traders lose. That was true in his day. It is true now and it will always be true.

TA is Pseudoscience?

80% is pseudo. The number of stocks making new highs is not pseudo.

Gann is pseudo. Greed and fear isnt pseudo.

Elliott wave is pseudo science. Manipulating a market is not pseudo. Learn to read a chart.

One of the reasons that 80% of traders lose or 90 lose 90% in 90 days is because they ask advice from the people least qualified to give it.

This is all very relevant. If we can't define what we're looking for we'll probably never all agree whether its been found.

It looks like most new traders (who comprise the bulk of losing traders) mis-use TA rather than use it. Even when its used properly, there will still be traders who don't make a profit from TA and that will so often be due to poor money and risk management.

Even if used properly , people will so lose due to psyche.Why should the 95% number change , the fundamentals of a junk science are creating failures.

 

[barjon]

Even if used properly , people will so lose due to psyche.Why should the 95% number change , the fundamentals of a junk science are creating failures.

If it's junk, then why do you draw s/r lines all over your charts?

 

[foroom lluzers]

If it's junk, then why do you draw s/r lines all over your charts?

This is because I trade on probabilities , that it will not always work , it just gives me waves to enter trades , some may fail.

 

[barjon]

When I stopped using technical analysis immediately started making money , but the chimps keep starting new misinformation threads on trading using t/a.

The Barjon candle is technical anylysis by Lord Barjon , Microsoft is to start offering automated software using the Big candle , if Barjon sell for a few billion cheaper , people will then just load it to their brokers and it will make money automatically.

Since you dug it up from ancient history you might at least get it right. It was just a discussion thread entitled - Long Candles as support or resistance: Fact or Fiction? - I made no claims for long candles let alone traded them (as I made clear in the thread).

It's one of your diversion techniques. Misrepresent what someone has said - as you have just done on darkies day thread - then pooh, pooh it in your attempts to make out everyone but you is an idiot.

 

[sminicooper]

There has been for ever, argument on forums about what works/doesn't work. About whose fault it is that people lose – brokers/the market/conmen/you name it - and myriad other things. But not usually the one single common factor: us, the Trader!

Could it be that the weak link in the whole shebang is the trader and why should we be so surprised? In any difficult line of work (e.g. craftsman, brain surgeon, rocket scientist, top sportsman) it not only requires loads of determination, hard work, skilled teaching and opportunity but also an aptitude. And aptitude is something you've either got or you haven't – an expensive course can't put it in (rather reminds me of the current UK education system where supposedly you can have "education" pumped into you and thereby be qualified to undertake university level education – sad joke perpetrated by politicians) This is where it gets dangerous for trading: all you need is a small amount of money and you can get started without any of the foregoing requirements. And people wonder whether it's TA that's the problem!



Should we not be amazed that such a large percentage of traders are indeed successful ? (5%? 20%? – depends on your definition of success and who you believe). The fact is that just like brain surgery and other skilled occupations, most of us are just not cut out for it but refuse to accept the fact. Not surprising really when you look at the industry dedicated to emptying our wallets. It's just the same as the unrich people I see every week who take the trouble to queue up and buy lottery tickets – complete waste of time for almost all of them and they would make their life a lot less complicated if they just took the money out of their wallet and stuffed it down the nearest drain on the way to the lottery machine – it would save queueing.

Ask any person who makes money out of the market whether they have real concerns over manipulation/brokers/TA and all the rest of it, and I suspect that they would regard all those sorts of things as just minor annoyances and easily coped with even if they are true.

The market is there to give you money but it does require an awful lot of losers for each successful person as far as I can see. And I don't see why any successful trader needs to demonstrate their success – if the rest of the world doesn't want to believe it, then fine – that's their problem.

PS – TA does work (at least for me, anyway)

 

[EnlightenedJoe]

I think foroom mis-sold barjon candles to me. I want a refund.

 

[EnlightenedJoe]

And I don't see why any successful trader needs to demonstrate their success

They don't unless they boast what they have got works. I am curious, why the need to boast ? My analysis suggests they are trying to mislead people, therefore it is justified to challenge them. I have not seem one who is able to withstand a challenge.

 

[tomorton]

PS – TA does work (at least for me, anyway)

Thumbs up!
TA works if you can use it.

But just as a cr@p driver can only use their satnav to get to the scene of the accident more directly, TA can't over-come cr@p trading.

 

[foroom lluzers]

Thumbs up!
TA works if you can use it.

But just as a cr@p driver can only use their satnav to get to the scene of the accident more directly, TA can't over-come cr@p trading.

roads on sat nav don't change shape , like charts of the trading gold.

 

[foroom lluzers]

Since you dug it up from ancient history you might at least get it right. It was just a discussion thread entitled - Long Candles as support or resistance: Fact or Fiction? - I made no claims for long candles let alone traded them (as I made clear in the thread).

It's one of your diversion techniques. Misrepresent what someone has said - as you have just done on darkies day thread - then pooh, pooh it in your attempts to make out everyone but you is an idiot.

ok big jon

Why don't you open a journal and post advance trades , to show how to use technical analysis.I know how to use it , but you know , it is very funny to read clowns discussing /boasting about successful trading in hindsight , when they really can't.This is really like a 75 year old , getting orgasm only in the mind., none in reality.

 

[foroom lluzers]

Does TA work?


It is well documentated and a few minutes on google will confirm, that some of the worlds greatest traders, both past and present, did use and still do use technical analysis.

Is there any evidence , that they are like sheep following the herd?



http://www.followingthetrend.com/2014/05/why-technical-analysis-is-shunned-by-professionals/

 

[David Knight]

TA is bunk and is misinformation. If it works, it should be self-evident. The reason 99% of the people lose is precisely because they use TA.

Instead of saying this person can do it, other people can do it, the question is can you do it ? If not then TA doesn't work. Feel free to demonstrate otherwise.

'If it works it should be self evident'

I really don't think it can work in the way you appear to demand that it works. Isn't that the holy grail stuff that doesn't exist? Anything obvious will be traded out of existance.

Surely only the most naive beginner believes that an indicator tells you when to buy and sell. The clue is in the word indicator...

When you 'suggest' that someone starts a journal to prove something to you/others that's a big demand on somebody's time isn't it?

Often, when someone is kind enough to put the effort in, the response is negative (to put it mildly)

I'd be More Than Happy To Accept Your Challenge. However, I, like you, no doubt, value my time So please-

Tell us the exact rules for deciding it works/doesn't work.What is it that you would like to see demonstrated?

1- That someone can use technical tools to figure the current probabilities and come up with a trading idea that has better chance of being correct as opposed to throwing a dart at the chart?

2-Someone making Gann like predictions using TA?

Don't be shy Joe (haha) I'm sure there are loads of guys in your camp who would love to see you give me a pasting.

(To save time Joe, I gotta tell you straight, I can't do no 2 (maybe I should rephrase that) )

Some highly intelligent academics have had the courtesy to prove beyond all doubt that they have no clue about trading by taking the time and trouble to produce completely worthless papers on a subject they don't understand.

And I'm sure the trading community is very grateful when these guys provide some entertainment to, what is often , a very dry subject (TA)

No doubt the academics feel vindicated whenever one of the 95% failures quotes their work to help justify why they cant take responsibility for simple money management skills. It's rare, but some guys resort to academia if they have no research themselves.

But, since you know how to trade. I, for one, would welcome some real evidence to back up your argument. At least you're a trader. (You are a trader...aren't you Joe?, 'cos if you're not that would weaken your case slightly, well, quite a lot actually)

So the least you could do is clarify what your actual argument is. You know, narrow it down to maybe a 12,000 word essay where you prove 200 indicators used by a sample of , say, 20,000 traders in 15 countries trading in both bull and bear markets didn't work.

At least give us a solid academic foundation that proves how everybody has failed in their efforts to convince you that they may be smarter than you... just a suggestion.

And don't forget to provide verified trading accounts so we know you know what you're talking about. (if you want to skip yours, I'll skip mine)

Or... just carry on as you are, wasting time and cyberspace in the exact same style as hundreds of other unhappy campers before you.

Forum owners usually place value over quantity in an ideal world, but sometimes post count alone is a status symbol for some people)



When people say TA doesn't work it really ignores some very basic TA that actually can't fail.

Still, instead of taking a view on whether we think sup/res gets broken today based on... whatever we deem appropriate, we could just accept that the market is random because somebody who isn't a trader wrote a book.

How I wish I could go back in time and save all those wasted years of struggle. What I should have done is come on a forum and ask guys like joe what they think I should do.

Maybe Joe could come round your house some time, pay your bills, screw your wife and run your trading account for you. That could save you starting out on the wrong foot.

Typically, I insisted on doing everything the hard way... oh well.

I guess I'm not enlightened... It's a drag to be weighed down with anything...like evidence.. and stuff. Have you ever considered going into politics Joe?

I hear that if you repeat things enough times with authority, the sheep start believing it.

The advantage with politics is you can fine/jail anyone who disagrees with you.

But, I'm sure you want final definitive confirmation either way on this question. Does TA work or not?

I mean, you have no skin.., I mean ego in the game do you Joe? You don't mind being wrong on a trade do you?

You know, when I'm wrong, i'm wrong. And when I'm right I like to ram it home, you know what I mean? I like to add to a winning trade.

Tell me you don't add to losing trades Joe There's not gonna be much point leading a horse to water if you're not actually thirsty.

You said:'TA is bunk and is misinformation'

If we go ahead with the challernge that you yourself demanded, and it turns out you were wrong, are you OK with eating your words in front of the whole forum?

You're not gonna slip away and come back with a new handle are you?. Or will you thank me for leading you to the light (finally)

I think i'm finally looking forward to one of the enlightened one's posts....

 

[barjon]

This is because I trade on probabilities , that it will not always work , it just gives me waves to enter trades , some may fail.

That's about one of the few things you've said that I agree with. TA (including your s/r lines) just gives you trade opportunities. Price may then proceed favourably or unfavourably and if you are prepared for either eventuality you should do ok.

 

[sminicooper]

This is because I trade on probabilities , that it will not always work , it just gives me waves to enter trades , some may fail.

Absolutely. One of the fundamental principles of successful trading. :clap:

 

[David Knight]

Is there any evidence , that they are like sheep following the herd?



http://www.followingthetrend.com/2014/05/why-technical-analysis-is-shunned-by-professionals/

How many global financial crisis do you need ?

Royal Bank went bankrupt because their ceo went on a spending spree buying up worthless 'assests' without doing any due dilligence. Many other institutions did the same.

Which sheep were buying Goldman's crap they were shorting at the same time?. How many banks were lending money to people who could never repay?

Isn't Barclays being critisized for irresponsible lending trying to sell 60k car loans?

How many times are these sociopaths going to repeat the same stuff over and again?

What evidence... are you kidding me?

Isn't there a race to get a few more metres nearer the exchange right now? These guys have a business plan that is always... always based on the same biz plan as the rest of the criminals.

Is there any evidence?
Professionals shun technical analysis.. they just rely on things like Black Scholes. (Because the market is random isn't it)

Algorithm? what's that a reggae song? Shun TA my ass.

The article you're quoting even admits that basic TA probably works :Common sense things where technical analysis was used as a tool to visualize abstract phenomena.

I said 80% probably has no value.

The whole article is about how conmen gave TA a bad name.

Another quote from your chosen article

There are actually plenty of professionals using concepts originating from technical analysis.

 

[foroom lluzers]

How many global financial crisis do you need ?

Royal Bank went bankrupt because their ceo went on a spending spree buying up worthless 'assests' without doing any due dilligence. Many other institutions did the same.

Which sheep were buying Goldman's crap they were shorting at the same time?. How many banks were lending money to people who could never repay?

Isn't Barclays being critisized for irresponsible lending trying to sell 60k car loans?

How many times are these sociopaths going to repeat the same stuff over and again?

What evidence... are you kidding me?

Isn't there a race to get a few more metres nearer the exchange right now? These guys have a business plan that is always... always based on the same biz plan as the rest of the criminals.

Is there any evidence?
Professionals shun technical analysis.. they just rely on things like Black Scholes. (Because the market is random isn't it)

Algorithm? what's that a reggae song? Shun TA my ass.

The article you're quoting even admits that basic TA probably works :Common sense things where technical analysis was used as a tool to visualize abstract phenomena.

I said 80% probably has no value.

The whole article is about how conmen gave TA a bad name.

Another quote from your chosen article

There are actually plenty of professionals using concepts originating from technical analysis.

rbs going had nothing to do with use of t/a b/s.

 

[foroom lluzers]

That's about one of the few things you've said that I agree with. TA (including your s/r lines) just gives you trade opportunities. Price may then proceed favourably or unfavourably and if you are prepared for either eventuality you should do ok.

T/A as it is does not offer a profitable solution , there are parts of t/a one has to use , then apply patience with it and wait for the trade set up to materialize into a profitable trade.

If a trader is ready for short term failure of t/a , they are readier to use t/a.