Topic: Technical analysis is total bunk. - page 3. (Read 8191 times)

ahhh i was waiting for this thread...


you're quite wrong. read on.


+1


can you visualize the derivative of f(x) = x^3 +2x^2 + 1? of course not.

but we know mathematically that it is f'(x) = 3x^2 + 4x. and we can graph this. and then we can visualize it.

price is a very, very complex function and graphs are extremely useful at visualizing the relationship between different sets of data.


while this does come into play, TA works even without this mechanism.

how? you might ask.

technical analysis in general is just applied calculus. as a rule the momentum of the price changes before the price does. this is equivalent to saying that the derivative of an increasing function begins decreasing before the function itself does, and vice versa (which answers the question of how can past performance 'predict' future results).

in other words, get your heads out of your asses. you don't need to understand stochastic calculus to understand TA (most algorithms are algebraic transforms of price and volume), so go to chart school and stop shitting on our parade.

In most cases I agree, and for bitcoins TA is useless.

You just proved my point. No TA is required. The price tells you all you need to know at any given time. Trade what you see. Don't let TA distract you from the realities that prices are providing. No subscription required.

I think the point with TA is that in a company, someone always knows, and their actions will move the price. Using TA, you may be able to spot those actions early, and take a profit before everybody else.

I only mean it in the sense that it allows you to measure some functional quantity on the market. Averages are used in TA, and you can't deny that an average is a useful quantity when looking at the market. The same with the other indicators. It just gives you some reference with which to compute volatility and other market components.

you would be 110% correct if it werent for one important oversight: self fulfilling prophecy. If enough people believe the tea leave readings some people sell as analysis, then the predictions based on it will more often be right than wrong. Of course tea leaves or horoscopes would work just as well as drawing lines on a chart, at least as people look at the same leaves or horoscopes and use similar metrics.

Yeah my point, if you missed it, was that nothing in trading is absolute...maybe aside from paying exchange trade fees.

Technical analysis has it's merits, however it is also a tool that works best in large markets where any single traders sudden impulse get's averaged out.

TA is certainly capable of spotting larger covert trading operators and judge general sentiment but it's easily manipulated by the same people that have the money to move the market.

If Technical Analysis was applied to a natural phenomenon, could be ocean levels the past billion years, it would be a lot easier to agree on the right way to use such a tool. Nature is not trying to fool the scientist. If the scientist is wrong it's always the scientists fault.

Economics is not a science, anyone trying tell you that is either a fool or trying to fool you. However, evolution has taught us to see patterns everywhere, in clouds, you girlfriends way of kissing you good night, etc. So even without TA, you tend to see patterns everywhere. If the price rises you want to buy.

Imagine someone invents a technical indicator and is'nt telling anyone about it. It works really well and the guy makes good money.

The moment he writes a scientific article other traders start to use it and it works even better. Everybody think this guy is revalation to the jungle of economics.

The catch however, is that the second the method is published, it stops being science. Just the market knowing about this new method makes it work better than it possible can, and after a while, traders start taking advantage of the kind of trading this new analysis makes possible, and the brilliant guys method breaks!

Technical analysis is too well known to be of any use. The reason it works partially, is because some believe it works!

Do I use it myself, well yes and no for the above mentioned reasons.

So does flipping a coin.

@OP,

Anything ABSOLUTE in trading techniques (even calling TA as total bunk)....is TOTAL BUNK.

TA works a certain percentage of the time.

TA doesnt work a certain percentage of time.

Not sure about this.

Math, yes. You need a bit of mathematical training.
And most importantly, you need a fair dose of common sense.

But I can't see anything substantial that the so called "Technical Analysis" would add on top of this.

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??