why-technical-analysis-is-nonsense

Hotch

Experienced member
1,410 256
I found some of the comments interesting/amusing.
QFT

My viewpoint has always been that most things are valid, everything shows you the same picture really. Indicators work perfectly fine if you understand them and know what to look for. Chart patterns etc are for people who know the market better and can basicly read what an indicator would show you right off the chart, and those in the city (from my experience) just read the tape because they sit at the chair all day and don't need a chart to tell them where price was last month, they know!
 
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ymanly

Junior member
49 3
intraday trading

Hello,

Is it more important to know what than why, when applying candlestick patterns to intraday ES trading? Where almost always, there are 2 runs per day. Or a simple ranging day? With the occasional "trend" day. Does "why" help on a "trend" day, or is what the all day issue? thanks george
 

Calinor

Active member
184 20
Thanks, it was worth a read :) Many would say fundamental analysis is nonsense too. and would cite example after example of price doing the opposite of what the fundamentals should imply. Or before crashes the price starting to go into a downtrend which is not based on any known fundamentals. I tend to think that neither is useless. The edge they give may be minimal, but it is added information beyond chucking darts at a board. The only problem is when you misuse some parts of technical analysis.

I mean, trend lines are technical analysis. And it doesn't really matter why it works, but if a % believe in technical analysis, then price will often bounce off a trend line. Fibonacci levels might be nonsense, but if there is a % of traders who believe it will retrace to the 50% level and then continue the original move, then you will see a bounce. It might bounce for a few ticks, and then reverse and go in the opposite direction.

At the end of the day, the price is driven by sentiment. And if 30% believe in fundamantals, and 10% believe in technical analysis, and rest believe in buy and hold or tossing coins to pick up or down, then there is value in knowing which direction those 30% think it will go, and which direction those 10% think it will go. Haven't certain 'market wizards' made fortunes using indicators based only on price? I believe there are some successul trend following hedge funds (and some unsuccessful ones), but this article kinda makes it seem that nobody uses technical analysis.

But what do I know...I'm not an experienced trader.
 
Last edited:

ymanly

Junior member
49 3
If I use candlesticks only trading the es, 15 minute chart with no lines, no indicators of any kind, only candles patterns, hammers, shooting stars, etc. is that failure looking for place to happen?
 

rags2riches

Well-known member
399 135
Just in case anyone thinks I'm being serious, I think technical analysis is great trading tool and if it works then it works. The "why" is secondary. :)
 

ymanly

Junior member
49 3
The biggest problem with the broad brush comments about ta being worthless, is , this comes from those who trade position trading, equities, etc. Intraday trading eminis will be conquered when you use candlesticks, no lines, no guessing based on a few years of hard work, all system components are candles and rules...no times/no news/no s/r/no why...never any why...only what and the one word never used........where?...where on the chart is it showing what?...not just what...why is not in my trading vocabulary. The great why traders referred to do not trade emini s intraday relying on why.....2 trades per day normal...why is irrelevant.....what/ trend is ...then get to the point where you can nail the apex within a couple of points and you beat the why guys easily..
 

TheBramble

Legendary member
8,395 1,170
Thanks, it was worth a read :) Many would say fundamental analysis is nonsense too. and would cite example after example of price doing the opposite of what the fundamentals should imply. Or before crashes the price starting to go into a downtrend which is not based on any known fundamentals. I tend to think that neither is useless. The edge they give may be minimal, but it is added information beyond chucking darts at a board. The only problem is when you misuse some parts of technical analysis.

I mean, trend lines are technical analysis. And it doesn't really matter why it works, but if a % believe in technical analysis, then price will often bounce off a trend line. Fibonacci levels might be nonsense, but if there is a % of traders who believe it will retrace to the 50% level and then continue the original move, then you will see a bounce. It might bounce for a few ticks, and then reverse and go in the opposite direction.

At the end of the day, the price is driven by sentiment. And if 30% believe in fundamantals, and 10% believe in technical analysis, and rest believe in buy and hold or tossing coins to pick up or down, then there is value in knowing which direction those 30% think it will go, and which direction those 10% think it will go. Haven't certain 'market wizards' made fortunes using indicators based only on price? I believe there are some successul trend following hedge funds (and some unsuccessful ones), but this article kinda makes it seem that nobody uses technical analysis.

But what do I know...I'm not an experienced trader.
Calinor, an exceptional post and one which leaves me, quite uncharacteristically, with nothing to add.

Spot on.

For those interested in an intelligent review of the usefulness (or lack thereof) of TA from a pro traders perspective I can wholly recommend "Technical Analysis and the Active Trader”; Gary Norden.
 

ymanly

Junior member
49 3
when i say nail the apex that is something dbphoenix said few can ever do as it takes massive time and effort to get there...few will do that ..it is more of a personal thing for me but it does help to id the end of run and zero starting point {mr marcus term} of new run.../channel.../trend/
 

ymanly

Junior member
49 3
TheBramble...with much respect I ask the question. Do you remember Mr. Marcus. He is special to me. I know he was gravely ill and I cannot reach him via email. Have you heard anything of him? Thank You ymanly
 

Paul71

Senior member
2,056 412
Calinor, an exceptional post and one which leaves me, quite uncharacteristically, with nothing to add.

Spot on.

For those interested in an intelligent review of the usefulness (or lack thereof) of TA from a pro traders perspective I can wholly recommend "Technical Analysis and the Active Trader”; Gary Norden.




Tony,

You seem very 'sheepish' :LOL: in your return from the oblivion. You've just read a post where the poster admits to the markets being driven by sentiment, and yet you have 'uncharacteristically' nothing to add????




I guess you are getting old, Tony.



Love you,



Paul.
 

TheBramble

Legendary member
8,395 1,170
TheBramble...with much respect I ask the question. Do you remember Mr. Marcus. He is special to me. I know he was gravely ill and I cannot reach him via email. Have you heard anything of him? Thank You ymanly
You only joined Tueday this week so how do you know of dbp and Mr.M?

Mr.M has been posting here this week so not that gravely ill obviously.

Try repping or PMing him if you don't have his email.
 

TheBramble

Legendary member
8,395 1,170
You seem very 'sheepish' :LOL:
That’s lost on me Paul. Sheepish? Spell it out my boy.

in your return from the oblivion.
It seems to me more appropriate to consider I have returned TO the oblivion - to help you lot out, even though most of you don’t deserve it.

You've just read a post where the poster admits to the markets being driven by sentiment, and yet you have 'uncharacteristically' nothing to add????
There are more things in Heaven and Earth…..

I guess you are getting old, Tony.
Undoubtedly. Older but no wiser. It’ll hit you hard when you realise we are probably both aging at a similar rate. Although in my case, my looks will never fade.

Love you,
I know. Love you too hoo….
 

Paul71

Senior member
2,056 412
That’s lost on me Paul. Sheepish? Spell it out my boy.

It seems to me more appropriate to consider I have returned TO the oblivion - to help you lot out, even though most of you don’t deserve it.

There are more things in Heaven and Earth…..

Undoubtedly. Older but no wiser. It’ll hit you hard when you realise we are probably both aging at a similar rate. Although in my case, my looks will never fade.

I know. Love you too hoo….




:LOL:Yeah, you are now in the oblivion. The heaven and Earth bit though.....you can't use that.....surely? As for the age thing, surely you will start losing your marbles at a faster rate then me......i'm sure you are older??


Sheepish. I don't know wether or not you have stopped progressing and relapsed into an indicator type trance/mode:)




Q) In a perfect world, who can make the most money out of a move? The indicator trader or the PA trader?
 
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