Why doesn't traditional technical analysis work in the crypto market?

randythered

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Quote from: Gabb on September 01, 2018, 02:46:45 PM

The efficiency of the predictions and signals provided by the technical analysis has remained in constant debate over the years, and most of the true experts in financial mathematics take for granted that this is a pseudo-science plagued with assumptions and myths that have made it very overvalued by those who do not want to take on the great uncertainty that reigns in the markets and seek some anchor to hold on to before the stormy swings of the market.

Therefore, it is true that Technical Analysis does not work in the Crypto market due to its remarkable differentiation with respect to institutional markets, however it has not even been possible to demonstrate that it works properly in any other market.

I highly disagree, if you read my above comment you'll see much of my reasoning but it is akin to receiving advice from a friend on a difficult situation. You still have to interpret that advice in your own way and make your own conclusions so that you can make the best decision, you do not just follow it word for word.

Gabb

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The efficiency of the predictions and signals provided by the technical analysis has remained in constant debate over the years, and most of the true experts in financial mathematics take for granted that this is a pseudo-science plagued with assumptions and myths that have made it very overvalued by those who do not want to take on the great uncertainty that reigns in the markets and seek some anchor to hold on to before the stormy swings of the market.

Therefore, it is true that Technical Analysis does not work in the Crypto market due to its remarkable differentiation with respect to institutional markets, however it has not even been possible to demonstrate that it works properly in any other market.

randythered

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Traditional technical analysis does work in the crypto market but only as a signal and when used as guidance not a rule. This is the same in more traditional markets, anyone who follows TA at all times will get burned, intuition is always needed in the form of knowing when or when not to follow a buy/sell signal generated from TA.

i7claufe

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AhrvoDEEX FUTURE OF BROKERAGE TRANSACTIONS

It does work in the past for me specially when the market was stable, today it does not really work because the market is in a very bad state and we all know we are currently in a bear market. Also we can't short the cryptocurrency exchange market which is possible to do on the stock market and that's where we make money during bear markets on a stock exchange.

The_Dark_Knight

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Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

This is something that can be resolved by reading a decent book about trading, if you do that you will realize that the first thing you need to have in order for technical analysis to work is a market that is big enough and that has a big volume as well, and there are only a few coins that meet that criteria, all the rest of the coins do not fit that criteria and technical analysis should not be used.

cuprice

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I think this crypto investments are not following any patterns and this makes those traditional methods as only a reference. Sometimes it works but not all the time.

bitekoin

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Quote from: styca on August 20, 2018, 12:35:02 PM

Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

I think two key considerations are:

Trading volumes are often thin. This means that when a coin has a certain price, that price is not firmly established. So wild fluctuations are inevitable - particularly evident with smaller coins, where a big buy or sell can potentially wipe out the whole order book.
Every coin relates to BTC (and/or ETH) as the other half of the trading pair. So it's not the same as traditional markets, where a product can lean on the stability of a fiat currency. So what this means is that BTC or ETH price moves can dramatically affect the price of smaller coins.

An example combining these two - Say a coin has a price of 0.1 BTC, with BTC at $6,000. But that price is based on a single order, the next sell is at 0.2 BTC, and the next buy is at 0.05 BTC. In this scenario, a single buy or sell can double or halve the coin price. But maybe the order book is so thin that there are no more orders fulfilled for another week, and during that time, BTC climbs to $9,000 - so this coin at 0.1 BTC has suddenly had a 50% price rise in fiat.

Makes sense, but then from this logic we should conclude that BTC trends should adhere to TA fundamentals, since BTC does not apply to the two considerations itself, right?

shanem

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I would say that technical analysis will be less accurate when the market cap of the crypto market is a lot lesser than the traditional stock or forex market. In this crypto market, it does not take much funds to move the market whereas in traditional markets it takes a lot of funds to move the market by an equal percentage. There are more newbie traders who will panic buy or dump in the crypto market.

newinbtc

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Traditional methods are based On Stock Market. In Case of crypto Its 24 Hours open. Not close By day end as in Stock market.
Our analysis on Cryto is always Predicable. No can Say Exact At this time Market will fall or Go Up.
Cryto Price is based Or last Order placed by customer. It does not matter At what quantity it was placed.

tenebriscaelum

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I would say that in the cryptocurrency market technical analysis in always a 50/50 percent basis because of how volatile the market is with many factors to consider as opposed to the stock market. With that being said it is still better to have a technical analysis on your own as it will still minimize your risk and do not get them from other people specially to the ones that you only want you to invest in a certain altcoin to manipulate its price.

AltcoinsBattle

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Quote from: Red-Apple on August 21, 2018, 06:36:55 AM

because Technical Analysis is mainly created for a reasonable market without any kind of manipulations in it or at least a minimal amount but mostly a logical market which moves based on supply and demand.

but when it comes to altcoin market, the manipulation is the dominating force that controls everything. they are constantly pump and dumping altcoins. you can never factor pump and dumps inside your TA! it is not designed that way.

using TA for altcoins in my opinion is like wanting to open a screw with your teeth instead of using a screwdriver!

From what I researched on the crypto market, I saw that TA is working. This is due to the fact that this market is decentralized. In the stock market there are many manipulators and there TA on another level, between the masters of market. The crypto market is more natural.
Pump&dumps have long been described in TA.

trumper

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Quote from: kingzpro on August 20, 2018, 03:24:16 PM

I think it does work but for that you need high liquidity and most of coins in the crypto market do not have decent volume and liquidity that is why they sometimes act strange, if you are a day trader and work on the basis of technical analysis you should trade only high volume coins like btc and eth on 2 to 4 hour chart and timeframes.

I agree with you, technical analysis may not be useful for many coins right now but it definetely works and is beneficial.

Red-Apple

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because Technical Analysis is mainly created for a reasonable market without any kind of manipulations in it or at least a minimal amount but mostly a logical market which moves based on supply and demand.

but when it comes to altcoin market, the manipulation is the dominating force that controls everything. they are constantly pump and dumping altcoins. you can never factor pump and dumps inside your TA! it is not designed that way.

using TA for altcoins in my opinion is like wanting to open a screw with your teeth instead of using a screwdriver!

Dodoymabs

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Quote from: apimembership on August 20, 2018, 04:07:52 PM

I can't simply say Technical Analysis is not working, it simply works when you use it with different information and dont just rely on it. There are many factors in crypto, it is not just TA, there is Fundemantal Analysis too. Technical Analysis should be just a way to get info for a coin, it wouldnt be everything to invest to a coin.

It can help at some point, but there's no assurance of a perfect analysis. Cryptocurrencies behaves unnaturally which everyone only depends on speculation so traditional analysis won't work effectively.

AAlex48

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Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

The levels work well enough.Whatever happens the psychology of people will not change, there will always be a human factor.

nizelong

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Certainly not working here is not the stock market, although it is very similar, but the back is very different. Perhaps it is because cryptocurrencies are just beginning, and technology can be used in the future.

saganpav

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SPOKKZ

I think that classical analysis methods do not always work, because cryptocurrency is relatively new and these methods are not yet completely adapted. Yet very often the forecasts are correct.

EastSound

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You cant use those traditional methods in a unstable and manipulated market, besides most are trading emotionally.

apimembership

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I can't simply say Technical Analysis is not working, it simply works when you use it with different information and dont just rely on it. There are many factors in crypto, it is not just TA, there is Fundemantal Analysis too. Technical Analysis should be just a way to get info for a coin, it wouldnt be everything to invest to a coin.

kingzpro

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DIFX - Digital Finacial Exchange

I think it does work but for that you need high liquidity and most of coins in the crypto market do not have decent volume and liquidity that is why they sometimes act strange, if you are a day trader and work on the basis of technical analysis you should trade only high volume coins like btc and eth on 2 to 4 hour chart and timeframes.

adroitful_one

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1GhxHtabWhEpdb7e7oEJ2vd542n33BwTHR

Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

Well, I have used TA with some success in the crypto space. As long as you stick to well established coins and don't try doing any technical analysis on pump and dump coins, it will more than likely help you out. A lot of coins are just pump/dumps and people dump their free coins they get from airdrops. This kind of thing doesn't happen in the stock market. Also, the market is completely unregulated, so you have a lot people with a lot of money manipulating the market

swissgang

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I think most coins are simply pump and dump, so technical analysis in fact does not make sense. It is good for short term.

styca

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Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

I think two key considerations are:

Trading volumes are often thin. This means that when a coin has a certain price, that price is not firmly established. So wild fluctuations are inevitable - particularly evident with smaller coins, where a big buy or sell can potentially wipe out the whole order book.
Every coin relates to BTC (and/or ETH) as the other half of the trading pair. So it's not the same as traditional markets, where a product can lean on the stability of a fiat currency. So what this means is that BTC or ETH price moves can dramatically affect the price of smaller coins.

An example combining these two - Say a coin has a price of 0.1 BTC, with BTC at $6,000. But that price is based on a single order, the next sell is at 0.2 BTC, and the next buy is at 0.05 BTC. In this scenario, a single buy or sell can double or halve the coin price. But maybe the order book is so thin that there are no more orders fulfilled for another week, and during that time, BTC climbs to $9,000 - so this coin at 0.1 BTC has suddenly had a 50% price rise in fiat.

Victorycoin

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Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

I think it is not exactly correct to say TA have been abysmal in detecting trends in the cryptocurrency market, because the comparison with the stock and forex markets seem not to take into cognizance the fact that the cryptomarket is not only young and still evolving, but far less capitalized than anyone of them, thereby making it easily influenced by the slightest strong beat in the ecosystem. With time and much more adoption by the masses especially business owners, I think the accuracy of the predictions looks good to improve.

Zadicar

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DGbet.fun - Crypto Sportsbook

Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

No doubt that TA is really always the main tool to be used by most traders but I would say that not all the times these TA's would be effective yet we do know that crypto market is always been volatile and most of the time it would really be mainly affected by news which means fundamental analysis would still required inspite on focusing yourself on just using technical. This is why I'm using both things because you can make your own analysis basing on whats the current condition of the market.

Tylev

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Quote from: bitekoin on August 20, 2018, 11:01:14 AM

There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

We still see that especially this year, no analyzes on the crypto-currency market do not work. On the one hand, the decentralized nature of the crypto currency is triggered, and on the other hand, we see that bitcoin is actively intervening from the side in the price of bitcoins.
At the end of each year, the crypto-currency market is rising and on the basis of this we hope that this year will be the same growth. However, bitcoin often presents us with unexpected surprises.

bitekoin

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There are two main methods used to analyze potential investment choices in stock and to and make investment decisions: fundamental analysis and technical analysis. Technical analysis is favoured by many statisticians and financial gurus, mainly if you are looking at speculation. It seems from its various characteristics that TA could fare well in this crypto space, but how come a majority of models I have seen have been abysmal in detecting some trends in the cryptosphere?

Topic: Why doesn't traditional technical analysis work in the crypto market? (Read 262 times)