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.

 

[ImogenBeaumont]

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.

Thanks for taking your time to explain

 

[steven46]

Hello Imogen

I happened to see your post and thought this might help you
with some reservations as follows

1) I have no business connection to "TraderDale". I was in contact with him
long ago, but have not spoken to him since. He has a reasonably good understanding
of how trading works
2) He does sell products that include indicators. Interestingly he (in the attached video)
suggests that indicators don't work. We agree on that
3) I was trained by an institutional trader long ago. He taught me a basic system
gave me a couple of tools based on volume, and let me watch as he traded his own account
4) I was a slow learner. Now years later I think I have a sense of what it takes to create a sustainable
business trading. When my mentor passed on recently, he asked me to "Pay It Forward" by
showing "a few" others how to trade. That is why I am posting.
5) I created a thread entitled "A professional approach to trading" If you decide to look at it
I suggest you only look at the most recent posts, since they show what I intend to present
to help traders struggling to make profit in this difficult business.

In response to my mentor's request I developed a simplified method just for Retail traders
I have been testing it and it seems to work quite well. In the coming days I will present a
LiveStream on Twitch and YouTube, that struggling traders might find useful. I will post on
my thread when that is about to go live.

Here is the Internet Link to a video from TraderDale, in case you would like to listen to what he
has to say, not only about indicators, but how he would proceed if he were to "start over today"
I use Volume Profile, but not in the same way that he does. His approach is known as "Swing
Trading" and requires a longer time frame approach. I trade the New York Session of the S&P
500 Futures on a daily basis (I am a daytrader).

⚠️ 16 Years of Trading Mistakes (And What I Learned)

Do you want ME to help YOU with your trading? Learn my proven Volume Profile & Order Flow trading strategies! Get my proprietary indicators and start making progress. We even set the indicators up for you so you can hit the ground running TODAY! Start Learning to Trade Now! Video Transcript: Hi...

www.trader-dale.com

I wish you the best of luck in all that you do

Steven

 

[corevaluecapital]

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

If everyone uses the same indicators or levels the same way, any simple edge tends to disappear because markets price in those behaviors. But the reality is, people interpret signals differently, use different timeframes, risk tolerances, and parameter settings.
So while technical analysis itself isn’t an edge, how it’s applied can be. The edge comes from context, combining indicators, timing, volatility filters, adapting to changing market conditions, and managing risk better than others who use the same tools in a static way.