You raise some interesting questions. Meta-TA is a good way to look at it.
If 100,000 people are looking onto Moving Averages, Stochastics, Volume, etc, then a winning trader should be able to interpret these
in ways that would evade the majority of the people observing them; that's how a trading edge is formulated.
Topic: Is TA a self-fulfilling prophecy? (Read 273 times)
TA can't really be used to determine the market fully because the crypto market is very volatile and it is very difficult to make use of just technical analysis to predict what way the market is going, I personally make use of events to predict the market and it has been working for me most of the time, especially when I hear about events that is really going to cause a big change in the coin, I think you need to mix both fundamental and technical analysis in other to be able to accurately predict the direction of the crypto market.
Technical analysis is most useful where the trader is strictly dealing on hourly trade where one does not have the chance to listen to news to decide ones trade, but when it comes to other types of trades, Fundamental analysis is the major tool that should be activated to make prediction and know the direction the trade will turn to.Let me just say that both are very important tool to trade, most people that rely on technical analysis alone are already fundamentals themselves, because they already know everything that is happening or will happen without having to read much about this, so technical becomes a useful tool to them.
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
TA can't really be used to determine the market fully because the crypto market is very volatile and it is very difficult to make use of just technical analysis to predict what way the market is going, I personally make use of events to predict the market and it has been working for me most of the time, especially when I hear about events that is really going to cause a big change in the coin, I think you need to mix both fundamental and technical analysis in other to be able to accurately predict the direction of the crypto market. However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
It doesn't mean when you say TA it is a self-fulfilling TA that would change the market prices. TA is just like a guideline that would tell you what would be the next price and what strategy should you use in the next price, it is more on speculation but with data.
Technical analysis does not say what's going to happen in the future of the market, it is just like when you are guessing what is going to happen, just like saying that something is likely to happen but you're not sure of it. That's what it is, it doesn't mean that what you predicted is going to happen.
If you check out most of the analysis you have been seeing since you became part of this community you will come to see that 90% of them didn't even come true. So, they are not always accurate, though sometimes they can influence the market a bit.
If you check out most of the analysis you have been seeing since you became part of this community you will come to see that 90% of them didn't even come true. So, they are not always accurate, though sometimes they can influence the market a bit.
Thanks all. Plenty of helpful and insightful responses so far, which are really helping to give me a more nuanced perspective.
I think most of the people not really understand about TA, technical analysis is only a speculation made by using a bunch of data, its not 100% accurate but it is showing the market condition, and in decentralised world anything could be manipulated so sometimes the speculation result could be different, TA is still very useful when you want to trade
I have always believed that technical analysis does not work properly. Crypto is very unpredictable and I do not know how the chart can predict which way its price will go.
All markets are unpredictable, not just crypto.
Charts do not predict the future.
These are two things that everyone should understand. Non-traders often have a very limited understanding of what TA is useful for. Most importantly, it informs a trader of entry and exit points and risk/reward. It cannot predict the future, ie tell us for sure what's going to happen.
At best, a good trading system recognizes a chart setup that completes 60-80% of the time. TA is about managing risk in probability-based scenarios. It's not a crystal ball. Any good trader gets it wrong 30-50% of the time. TA is what keeps us alive to profit another day by minimizing our losses and maximizing our gains.
I have always believed that technical analysis does not work properly. Crypto is very unpredictable and I do not know how the chart can predict which way its price will go. I think it's more important to use other factors here.
TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.
Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
You are right.I would rather use up Technical analysis rather than blindly making any orders without any basis or simply making trades blindly.It might not be precise but atleastRisk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
you do have the target basing on what you analyze but as said it isn't really enough for it for you to rely since there are other factors as well which would be needed or crucial to make your
analysis more effective or on higher possible chances of profitable positions.
TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.
Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
You are right.I would rather use up Technical analysis rather than blindly making any orders without any basis or simply making trades blindly.It might not be precise but atleastRisk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
you do have the target basing on what you analyze but as said it isn't really enough for it for you to rely since there are other factors as well which would be needed or crucial to make your
analysis more effective or on higher possible chances of profitable positions.
TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.
Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
You're right about that observation with TA on cryptocurrency. It's really difficult to get it to work because the crypto industry is easily influenced by unscrupulous whales. A lot of pumps and dumps without the faintest indication of news (FA) happen here and this defiles TA.Or is everything I've said complete nonsense?
Nope, you aren't nonsensical. On the contrary, you made a valid observation. 
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
Technical analysis is really vast and can't be correctly described within a scope of this thread. However, technical analysis really works in the real world stock market because these markets are heavily regulated, so the chance of manipulation is very less!
On the other hand, crypto market is nowhere close to regulated so manipulation happens everywhere for personal gain. That's the reason why the correct market sentiment can't be captured by TA in crypto market. So I won't say TA is useless, but it just doesn't work in crypto market!
I believe Technical Analysis would be efficient if paired with Fundamental Analysis. This two get along very well together. In case of cryptocurrency, as stated on the early reply:
TA alone will lead us nowhere in this cryptocurrency market.
TA is somewhat useless in highly volatile markets like bitcoin whereas in Forex and stocks, TA is an amazing tool, yet even then one shouldn't rely fully on such analysis. Anyway, I think TA has its own merits given that most traders are using it for their positions in the market, creating a hive-mind that makes normal market movements seem like a pattern that is followed by most people resulting into some predictions being correct. Since someone have started keeping 'patterns' of the market, anyone who reads it will take note of it and when that pattern appears, they'll know what to do and how to react. But yeah, it could work on relatively stable markets but not in cryptocurrencies at all time, given that the said market is young and a lot of people are doing different things at a given time.
TA alone will lead us nowhere in this cryptocurrency market.
People who have knowledge with Technical Analysis are somehow more prepared than newbies who doesn't have any kind of market knowledge at all. Why? Because there is more to it besides the studyung of charts, candles, moving averages, and volume as in TA you will also learn entry and exit points, the market's psychology, and overall a clear sense of the market which newbies don't have. So if you think you won't have an advantage from TA you should know that the knowledge you will gain will be really helpful in the crypto market.
I do believe that TA is more effective for forex traders. The volatility rate might be one reason the same might not be wholly said for crypto. My view is that , TA is not necessarily fulfilling the prophecy because it can't only be instrumental to a trader. There are market emotions or sentiment, news/fuds too.
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
For my experience well i am a breakout trader i can say from my technical analysis and using my knowledge to predict i can make 3-4 wins in a 5 trades. It is a very big help to predict where the trend is going and what possible ways how any coin can dump using other indicators. Your belief in trading using technical analysis can be different but more on traders earn from using it. However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
Of course we need to factor out that this market is prone to manipulation. That's why anti TA says that it's not applicable specially in a thin market such as altcoins.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
I would say that not all the time TA works in Bitcoin market, but I guess its good if you have something to back up your decision either to sell or to buy, and not just your emotions. Although this market can be manipulated, at least a good TA will indicate that something is wrong in the ecosystem right now and it's up to you to make that 'logical' decision and not just base on your feeling or hunch (which, unfortunately, most of us do.)
I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
The liquidity issue certainly affects TA. It becomes less and less reliable as you apply it to thinner and thinner altcoin markets. It's perfectly applicable to Bitcoin though.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?
It's impossible to know the answer to this. Personally, I don't think TA is self-fulfilling, or at least that's not the primary impetus for price movement. I think good TA often works because it specifically looks for imbalance in supply and demand. Eg when a breakout occurs, sellers are pressured to buy back to cut losses. It's only logical to then try to ride that wave, knowing that new buying pressure and momentum exists.
Surely contrarian traders try to fade the market like you're saying. Sometimes it works and sometimes it doesn't. Trading chart setups is never a fool-proof thing. Markets are still inherently unpredictable.
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