Its a fallacy for two reasons to say that 'TA' is bogus because not everybody wins using it. Reason one, most people HAVE to lose, it's a zero sum game! Reason two, a lot of technical analysts are trolls and cant explain a single thing about what they are doing.
There are some very robust laws playing out in the market that have to be respected. Ask any economist who 'understands the fundamentals' (
). He might tell you that forces of the market act to restore equilibrium. they do! a physics scientist will also tell you that this is exactly the model of a simple sine wave. In other words what goes up must come down. If the technical analyst uses leading indicators that effectively can measure momentum, acceleration and deceleration in price action, he has officially a legitimate mathematic and scientific edge in probability of choosing low and high prices to buy and sell.
gosh, really? what the hell does "equilibrium" have to do with it?
you think there are really hard and fast rules to any market?
seriously dude, forget this sine wave thing. it's rubbish seriously.
the closest thing to a market is a game of chess or poker. that's it. everything else, any rules or moving averages, indicators, or statistics, are incorrect.
how could you figure out the best move in chess by using statistics? clearly it would not work. the same goes for this sine wave thing. there are no logical rules to chess, just as there are no logicl rules to how a market works.
the way you win chess is to get inside the mind of the other player. that's why computers who are good at chess search through all the different possible moves and pick the best one. they dont perform any statistical analysis of previous gameplay, on the assumption that future gameplay will be like the past. the same is true of markets. to figure out how the market is going to move, you have to get inside the mind of the average trader.
any other strategy or technique is pure bullshit. we all know that indicators may occasionally work, but because they have no scientific merit they are not hard and fast and will fail.
there are multiple philisophical points that are brough up by this discussion, interestingly. but ultimately how your model works is more important than the output. if you base your model on incorrect assumptions, you are never going to get a satisfactory output. and that is where 99% of market predictions or indicators go wrong.
the only way to make money from indicators - or more broadly any form of technical analysis - is to sell them to other traders on false claims. john bollinger has done a pretty good job of that.