If everyone uses technical analysis, doesn’t it stop working?

[ImogenBeaumont]

I was wondering if most traders are looking at the same charts, levels, and indicators, wouldn’t their actions cancel each other out? Technical analysis works because people believe in it, but if everyone believes the same thing, does it still provide an edge

 

["D"]

Most retail traders cancel themselves out. It is what the industry refers to as dumb money.

Big assumption that technical analysis works. Depends on your definition of “works” and what you are using technicals for.

Technical analysis has zero predictive value, zero. Example: Trend trading. If trend trading worked as taught using technical analysis we would all be multimillionaires many times over. How many millionaires are on this board that made their money trading technical analysis? This place is, and has been for many years, overwhelmingly full of struggling and failed technical traders, an awful lot of people that eventually, slowly, faded away from trading. Where is the edge? Look at the statistics not the hype.

Technical Analysis does work well for money management.

 

[ImogenBeaumont]

Most retail traders cancel themselves out. It is what the industry refers to as dumb money.

Big assumption that technical analysis works. Depends on your definition of “works” and what you are using technicals for.

Technical analysis has zero predictive value, zero. Example: Trend trading. If trend trading worked as taught using technical analysis we would all be multimillionaires many times over. How many millionaires are on this board that made their money trading technical analysis? This place is, and has been for many years, overwhelmingly full of struggling and failed technical traders, an awful lot of people that eventually, slowly, faded away from trading. Where is the edge? Look at the statistics not the hype.

Technical Analysis does work well for money management.

Unfortunately it makes sense, but it is like without technical analysis there is something missing in trading.
And what do you mean by it working well for money management?

 

["D"]

Technicals can be useful in determining where to enter a trade. Useful in determining if you should take partial profits, completely exit a trade or add additional positions. Technicals are also helpful in determining your stops. Money management stuff.

You should do your research to determine what trades you are going to take without using technicals. Since technicals have no predictive value, technicals should not be used to decide what trade to take. Once you decide to take a trade then technicals can be useful in the management of that trade.