Is Technical Analysis Worth My Time?

there's one circumstance where TA could work - if you find a market (probably a very thinly traded one) whose main players use TA, you can use TA to bet against them.

But once a market gets large, general traffic that will break down.

But again, to find those markets you're competing against those tech giants with dozens or hundreds of mathematicians with access to huge computation facilities.

No different from driving your car by looking at the real mirror.

BTW, anybody knows who make a fortune by investing based on technical analysis?

wawa said:

My question was intended to ask you what work you have done in this field in order to have this opinion. I have spent many hours figuring out how markets move and why they move. I have come to the conclusion that some technical analysis is useful. The markets move on the basis of contraction and expansion of energy. This is why sometimes markets trend and sometimes seem to be random. The real sweet spot is to be able to identify the times when a market is about to enter an expansion period and enter just before. This is where the majority of my work has been spent. This method works on any stock or commodity in any time frame as energy patterns do not change. Thanks for the book recommendation; I prefer to do my own research. To summarize, the markets are only random some of the time and other times are very predictable if you have the knowledge.

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Sorry...contraction and expansion of energy? BS

Mencken said:

Sorry...contraction and expansion of energy? BS

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Anyone is free to post anything they like, but it is more difficult to post something of interest. You might take a moment to consider that perhaps, it is possible that someone might just have done more work on the subject than you are aware of. You are entitled to our opinion, and it is that opinion that restricts you from learning anything other than what the mainstream believes. The mainstream wants you to believe that markets are are random; this is how they make money of the public. This refusal to be open minded is why I very rarely post on this type of subject. It didn't take long to be criticized for my work. Sorry, but you need to open your mind to the realities of how markets move. It would be wonderful to have a meaningful dialogue about such a fascinating subject as this, but posts such as yours make it impossible.

wawa said:

My question was intended to ask you what work you have done in this field in order to have this opinion.

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Much research has been done on technical analysis over the years--it's bunk. I gave you a reference. There are many people who pretend otherwise, or fool themselves into believing otherwise. I pointed out there was some value in the momentum strategies, some evidence that works. But the classic TA stuff, the chart reading voodoo--is crap.

Those who like to defend this stuff refuse to look at the published evidence and instead make bullshit statements like this: "I have spent many hours figuring out how markets move and why they move."

Right there I know you're a loon.

fuji said:

Much research has been done on technical analysis over the years--it's bunk. I gave you a reference. There are many people who pretend otherwise, or fool themselves into believing otherwise. I pointed out there was some value in the momentum strategies, some evidence that works. But the classic TA stuff, the chart reading voodoo--is crap.

Those who like to defend this stuff refuse to look at the published evidence and instead make bullshit statements like this: "I have spent many hours figuring out how markets move and why they move."

Right there I know you're a loon.

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I asked you what work you have done in this field and all you can quote is someone's book. Anyone can quote a reference. If you have no original thoughts of your own to contribute, it proves how you are very closed minded. I have seen many people criticize you on this board for many different reasons. While I choose not criticize you as you have done to me, I leave it for others to pass judgement. Now, Fuji, please have the last word and call me what you will and prove my point.

I'm not giving you any personal information about myself. Sorry. All I can say is when you go on about doing your own research, and ignoring the reams and reams of published research--well you're a loon.

fuji said:

I'm not giving you any personal information about myself. Sorry. All I can say is when you go on about doing your own research, and ignoring the reams and reams of published research--well you're a loon.

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Now that's funny: Fuji calling someone a loon...

Hey Fuji. is that a little frustration showing from the dozens of people who repeatedly ridicule you to no end because of your loonie theories?

I don't personally believe much in TA myself but Wawa sounds much more reasoned and sane than the guy calling him names.

D.

There you go again fuji, now you claim to know about technical analysis in our trading markets. Holy shit man, is there any topic you don't know about? Using your google friend to back any comments will never replace experience, and on this topic you have no clue wtf you're talking about, which is par for the course for many topics that you participate on this board. As usual you know bubkus.

I've been trading for over 30 years in all markets, stocks, currencies, commodities, options, etc..... you name it, I've traded in it. I've been schooled by many successful traders both in Canada and the US. I also happen to know many traders, and really good traders who make millions a year, so I know a bit more than someone who makes claims based on some google research and/or reading some books.

I can assure you technical analysis has a place in trading, if you rely strictly on technical analysis for trading, especially in today's volatile markets around the world, might as well try Vegas. However, you have to know how to use technical anaylsis in conjuction with your fundamentals. The most successful traders ever in the world all had a sixth sense about trading and everyone uses technical anaylsis as one part of their trading strategy. In today's economic world, any trader who strictly uses technical analysis to trade will eventually line up at the food bank.

fun-guy said:

There you go again fuji, now you claim to know about technical analysis in our trading markets.

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Yes. I do know about it, and it is bunk. Depending on what you mean by "technical analysis". The classic chart reading stuff is bullshit.

Some of the stuff derived from the work of people like Richard Thaler, momentum, and so on, you might call "technical" in a sense. That has some merit.

But the classic chart reading style of technical analysis? It's bullshit. Yes some people believe in it, and try to convince you that they "know" it works, just like some people believe in astrology. When you look at it objectively though there's no merit to it.

What is classic technical analysis and chart reading? What is classic chart reading stuff as you refer to? Do you even kinow what momentum trading is besides reading it on the internet? Have you ever traded? Reading and regurgitating internet internet hyperbole doesn't make you any kind of an expert.

There are so many technical patterns available and they are to be used as tools to help you trade, any trader who solely trades on reading patterns is a fool, and any trader who completely dismisses technical analysis and claims it's bunk is also a fool. They should stick to their day job.

In modern day trading, not only is technical analysis a must to help you make or support a trading decision, one must understand inter-market relationships, geopolitical impact, international and regional economic influences, and on and on.........

It's a complex profession today, and definitely not one you can master by reading books and scanning the internet, you need to get your feet wet and as Nike used to say, just do it!

fun-guy said:

What is classic technical analysis and chart reading?

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If you don't know you shouldn't be trying to debate this topic with me.

any trader who trades on reading patterns is a fool

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I fixed your post. In my experience there are far, far more fools in the trading game than people with a clue. Day trading in particular appears to be an idiot magnet.

In the end you just blathered on spurting your opinion like it was worth anything. I've given you references. You've been farting. Post some data indicating that the chart-reading variety of technical analysis has ever achieved anything--hard, empirical, objective data--or go home.

I agree that there are effects that you can trade on, when it comes to understanding the impact of geo-political events on markets, if you can figure out what is going to happen a little faster than the next guy, you can make money. That, however, has nothing to do with reading charts. That's a form of fundamental analysis, even when it's not numerical, even when it's a hunch based on the tone of news reports or whatever. That sort of insight sure can make money.

Trading based on charts?

Bull. Shit.

I think there are lots of 'technical' ways of trading that can make money, but simply using well-known patterns without testing to see if they actually work is not likley to succeed in real time.

What I don't get is people who just start advocating or even actually trading using a method that they haven't tested themselves or at least seen reliable, third-party research validating its methodology.

I prefer to use trading systems of my own making, not relying on canned indicators provided with trading software packages. Then test, test, test, taking care to avoid curve-fitting and over-optimization.

Finally, many of the most profitable trading methodologies will have a less than 50% success rate, which is inherently difficult for most people to handle. They want high success rate strategies, which are often going to give them many small profits followed by the occasional big loss which renders them unprofitable.