Why technical analysis is not reliable

irhact

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Quote from: Silberman on July 18, 2024, 01:40:36 PM

This should not surprise anyone at all, anyone that is serious about using TA as a tool to obtain profits with should know this, since this is one of the first things actual traders warn about, TA can only work on a market that has a lot of volume, and this is because in this way you can avoid whales manipulating the movements of the market in an extreme manner and the effect insider traders may have, so it is obvious that most altcoins are unfit for the application of TA, and anyone interested in profiting from those coins must use other methods.

Using Technical analysis you can get an idea of how the market is going to move then you make your decision, it might not be exactly what will happen to the market but you can get a heads up to leave the market or continue trading. There are many altcoins that you can use technical analysis on, the altcoins has to be old ones and not the new ones that were just listed or you will be getting a wrong interpretation. A new token that has no history to look at, TA won't work but if it has 6 to 12 months of trading activity, it can be interpreted with technical analysis and you will get a good trade.

Silberman

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Quote from: AmoreJaz on July 09, 2024, 05:35:17 PM

Quote from: Silberman on July 07, 2024, 03:24:13 PM

Sometimes it is important to take a step back and take the time to think about what technical analysis is about, and technical analysis is nothing more but a tool that allows us to understand more clearly the past so we can make better predictions about what it may happen on the future, so once you understand this, it is clear that TA cannot be a precise tool as the circumstances surrounding the market are always changing, still I consider it a useful tool and one that can be very helpful once we understand its limitations.

TAs are not usually applicable in some of the alts market because the devs have other plans which is totally against any of these market indicators. A very good example is when the team decided to play the pump and dump scheme. I don't think any TA can be deployed on this as you will only get the hint if they will do this if you are following their social media platforms. Or worse, the team already abandoned the project before you realized you are holding their worthless coins/tokens. As we put it this way, most alt markets don't follow any TA indicators but you will find out real quick that common sense plays an important role not to get wrecked with your funds.

This should not surprise anyone at all, anyone that is serious about using TA as a tool to obtain profits with should know this, since this is one of the first things actual traders warn about, TA can only work on a market that has a lot of volume, and this is because in this way you can avoid whales manipulating the movements of the market in an extreme manner and the effect insider traders may have, so it is obvious that most altcoins are unfit for the application of TA, and anyone interested in profiting from those coins must use other methods.

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Quote from: AmoreJaz on July 09, 2024, 05:35:17 PM

Quote from: Silberman on July 07, 2024, 03:24:13 PM

Quote from: GxSTxV on July 07, 2024, 01:32:19 PM

Even that technical analysis can be used in most of markets, it is often failed to provide a correct prediction for the market next direction. This combination of indicators and patterns will not guarantee you anything more than a market historical analysis and old behaviors of traders.
It is only a tool to help traders identifying resistance or support levels, however, it won’t tell you when it is time for these levels to be reached, nor the future price direction.

Personally, technical analysis was a great tool for me as a beginner, a very helpful resource to understand the market. However, it is more unreliable with some markets, for instance it work better with Forex market than crypto market.

Sometimes it is important to take a step back and take the time to think about what technical analysis is about, and technical analysis is nothing more but a tool that allows us to understand more clearly the past so we can make better predictions about what it may happen on the future, so once you understand this, it is clear that TA cannot be a precise tool as the circumstances surrounding the market are always changing, still I consider it a useful tool and one that can be very helpful once we understand its limitations.

TAs are not usually applicable in some of the alts market because the devs have other plans which is totally against any of these market indicators. A very good example is when the team decided to play the pump and dump scheme. I don't think any TA can be deployed on this as you will only get the hint if they will do this if you are following their social media platforms.

The moment or situation on which technical analysis doesn't work;

1. Sudden developer plans
2. Community hype or simply fundamentals
3. First candle movement or simply it is still new.
4. Market sideways or consolidation

These are the times that you would be boggling your mind when you do make use of technical analysis.
You can't be sure on where it would be going and this is why you would really be that skeptical on making use of these tools but ofcourse
It would really be just that depending on how you would make yourself handle such situation.

No matter how bad the market is, you should really that still make use of indicators because it would really be still that relevant.
It's up to you on how you would be taking actions.

AYOBA

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Quote from: KupaCrypto on April 01, 2024, 05:18:26 PM

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.

The reason why people's recommended the technical analysis to some newbies that introduce themselves new to the trading, because trading have high risks and without the fundamentals and techniques they can never achieve what they want in trading. Because the those technical analysis are the best key for every trading, we all know that add it to another method of analysis is good ideal, but we should put the technical analysis consideration than others methods.

Quote

3.Technical analysis will not provide the full details of the market, that is putting economic and global events into consideration,

But at least technical analysis provides more information about the trading even in terms of control the market strategies, without the technical analysis knowledge there expectations about the market will go wrong.

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Quote from: AmoreJaz on July 09, 2024, 05:35:17 PM

TAs are not usually applicable in some of the alts market because the devs have other plans which is totally against any of these market indicators. A very good example is when the team decided to play the pump and dump scheme. I don't think any TA can be deployed on this as you will only get the hint if they will do this if you are following their social media platforms.

TA only works when altcoin finally find the right price for its value, then moving forward the short term candle can effectively be predicted using technical analysis, although people may not believe drawing line could do something but it does, because many people also follow the same method to determine future, the market which consists of many like minded trader will also follow TA.

like this chart for example

Quote from: https://coinmarketcap.com/currencies/ethereum/

you can see that within 1m chart candle there are so many ups and downs, those ups and downs most likely formed because traders are creating TA so they decide at which point they gonna dump and at which point they gonna pump.
this works like self fulfilling propechy, but it's only my thesis, but overall TA does sometime works but of course not 100% accurate.

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Quote from: Silberman on July 07, 2024, 03:24:13 PM

Quote from: GxSTxV on July 07, 2024, 01:32:19 PM

Even that technical analysis can be used in most of markets, it is often failed to provide a correct prediction for the market next direction. This combination of indicators and patterns will not guarantee you anything more than a market historical analysis and old behaviors of traders.
It is only a tool to help traders identifying resistance or support levels, however, it won’t tell you when it is time for these levels to be reached, nor the future price direction.

Personally, technical analysis was a great tool for me as a beginner, a very helpful resource to understand the market. However, it is more unreliable with some markets, for instance it work better with Forex market than crypto market.

Sometimes it is important to take a step back and take the time to think about what technical analysis is about, and technical analysis is nothing more but a tool that allows us to understand more clearly the past so we can make better predictions about what it may happen on the future, so once you understand this, it is clear that TA cannot be a precise tool as the circumstances surrounding the market are always changing, still I consider it a useful tool and one that can be very helpful once we understand its limitations.

TAs are not usually applicable in some of the alts market because the devs have other plans which is totally against any of these market indicators. A very good example is when the team decided to play the pump and dump scheme. I don't think any TA can be deployed on this as you will only get the hint if they will do this if you are following their social media platforms. Or worse, the team already abandoned the project before you realized you are holding their worthless coins/tokens. As we put it this way, most alt markets don't follow any TA indicators but you will find out real quick that common sense plays an important role not to get wrecked with your funds.

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Quote from: KupaCrypto on April 01, 2024, 05:18:26 PM

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.
Some of its limitations includes
1.it is based on assumptions about past market trends, gotten from the past market price and volume data
2.it is a backward tool subject to interpretation from different traders.
3.Technical analysis will not provide the full details of the market, that is putting economic and global events into consideration,
so traders should put all these factors into consideration before making an investment decisions using technical analysis.

As long as predicting the market is concerned, nothing can ever be relied on to work at 100 percent accuracy, if there was, don't you think we all did be rich by now, do you really think that professional traders will still sometimes trade at a loss? Of course not.

Technical of fundamental analysis (as the case maybe) is just a tool that helps traders and investors to make better predictions, remember the key word here is Predictions, which in other words, can be referred to speculation, which also means that it's something that is assumed to happen which one is not very sure of or certain about.

So, yeah, technical analysis is not a one way ticket to trading without loses, if it was, we all did be rich, yeah?, yeah, I think so.

Silberman

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Quote from: GxSTxV on July 07, 2024, 01:32:19 PM

Even that technical analysis can be used in most of markets, it is often failed to provide a correct prediction for the market next direction. This combination of indicators and patterns will not guarantee you anything more than a market historical analysis and old behaviors of traders.
It is only a tool to help traders identifying resistance or support levels, however, it won’t tell you when it is time for these levels to be reached, nor the future price direction.

Personally, technical analysis was a great tool for me as a beginner, a very helpful resource to understand the market. However, it is more unreliable with some markets, for instance it work better with Forex market than crypto market.

Sometimes it is important to take a step back and take the time to think about what technical analysis is about, and technical analysis is nothing more but a tool that allows us to understand more clearly the past so we can make better predictions about what it may happen on the future, so once you understand this, it is clear that TA cannot be a precise tool as the circumstances surrounding the market are always changing, still I consider it a useful tool and one that can be very helpful once we understand its limitations.

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Quote from: Gaza13 on July 07, 2024, 11:46:23 AM

Quote from: Maslate on April 11, 2024, 05:11:05 PM

Because majority of the traders are certainly relying on using technical analysis with its high advantage, and thus make them successful traders. But I do believe that they are well knowledgeable and skillful as well, and not just totally dependent on technical analysis. However, it’s actually doing a big part on them, the fact that they are also knowledgeable and skillful on how to use its technical analysis that becomes an essential aspect in the trading market.

Yes, of course a trader will definitely need indicators to analyze movements in the market. Without this, of course, it will be very difficult to get the expected results. Yes, it is true what you say. Extensive experience and knowledge make them successful in their trading and get the profits they want. But there are other factors, for example the news out there that will also greatly influence the impact of trading. Of course, we have to learn a lot from the indicators we use in our trading, even though sometimes the indicators we use can be wrong or imperfect in analyzing them.

You would really be definitely needing it on which you cant really just that make yourself making up some trades without having that consideration on which we know that when the moment that you would really be tending to deal up with this space then it would really be just that normal that you'll need up tools or indicators on which it would really be that making yourself having that kind of basis at least
on the actions that you would really be gonna tend to do so. We do know that when it comes to this kind of situation then it would be best that you do have basis rather than on having nothing.
You are just basically putting up yourself on such gambling approach if you do make up positions without having any consideration.

If this one turns out to be profitable for you then go ahead but usually people do rely with indicators rather than making up positions without any basis.

GxSTxV

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Even that technical analysis can be used in most of markets, it is often failed to provide a correct prediction for the market next direction. This combination of indicators and patterns will not guarantee you anything more than a market historical analysis and old behaviors of traders.
It is only a tool to help traders identifying resistance or support levels, however, it won’t tell you when it is time for these levels to be reached, nor the future price direction.

Personally, technical analysis was a great tool for me as a beginner, a very helpful resource to understand the market. However, it is more unreliable with some markets, for instance it work better with Forex market than crypto market.

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Quote from: mirakal

Quote from: bitgolden

This is the reason why it is said that if one wants to be a successful trader, he should be aware of the market moment by moment and keep an eye on the good side. If trading was so easy, then everyone would be a trader and there would be no such thing as poverty in the world.

Aside from that --we also need to learn how to extend our patience, accept mistakes, and be willing to learn new things. While the market behavior is changing, we also need to adapt to the situation. If we are impatient and want instant success and profit, this place is not meant for us. As we can see, only a few traders became successful because only a few people wanted to change. If old traders say TA is very important and a need to learn, therefore, we also need to follow it but sadly, most of us tried to find shortcuts and follow signal groups because they are not willing to spend time learning TA. A wrong practice and mindset makes a trader earn nothing but just losses.

I agree with you, by learning how to exercise patience in your hodling before using your technical analysis to trade in the market because there is no guarantee you will be right with your analysis all the time, because the market price still remain unpredictable meaning your prediction will not be accurate all the time.

When using technical analysis in trading your crypto, know that the market can change at anytime and don't allow that to make you feel technical analysis is not working in crypto trading because there are some traders using it to trade to earn profit from their crypto trading in the market. There is no way you will spend your previous time in learning technical analysis trading and you will not know how to use it to accumulate profit from crypto market, because once you have the knowledge of technical analysis, you will not be afraid of anything that will occur in the process of trading.

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Quote from: Maslate on April 11, 2024, 05:11:05 PM

Because majority of the traders are certainly relying on using technical analysis with its high advantage, and thus make them successful traders. But I do believe that they are well knowledgeable and skillful as well, and not just totally dependent on technical analysis. However, it’s actually doing a big part on them, the fact that they are also knowledgeable and skillful on how to use its technical analysis that becomes an essential aspect in the trading market.

Yes, of course a trader will definitely need indicators to analyze movements in the market. Without this, of course, it will be very difficult to get the expected results. Yes, it is true what you say. Extensive experience and knowledge make them successful in their trading and get the profits they want. But there are other factors, for example the news out there that will also greatly influence the impact of trading. Of course, we have to learn a lot from the indicators we use in our trading, even though sometimes the indicators we use can be wrong or imperfect in analyzing them.

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Quote from: mirakal on July 07, 2024, 07:04:20 AM

we also need to follow it but sadly, most of us tried to find shortcuts and follow signal groups because they are not willing to spend time learning TA. A wrong practice and mindset makes a trader earn nothing but just losses.

I believe those who follow trading signals to get instant results will not last long. Supposedly when they follow the signals given, they will learn something in trading. and for some traders who want to develop, of course they will pay attention and develop their trading skills even if they only increase slightly.
If you trade more often, I think your skills and technical mastery will also increase. Indirectly, it will make traders interested in some unknown analysis. Of course none of that applies to lazy traders.

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Quote from: bitgolden on July 06, 2024, 10:24:03 AM

This is the reason why it is said that if one wants to be a successful trader, he should be aware of the market moment by moment and keep an eye on the good side. If trading was so easy, then everyone would be a trader and there would be no such thing as poverty in the world.

Aside from that --we also need to learn how to extend our patience, accept mistakes, and be willing to learn new things. While the market behavior is changing, we also need to adapt to the situation. If we are impatient and want instant success and profit, this place is not meant for us. As we can see, only a few traders became successful because only a few people wanted to change. If old traders say TA is very important and a need to learn, therefore, we also need to follow it but sadly, most of us tried to find shortcuts and follow signal groups because they are not willing to spend time learning TA. A wrong practice and mindset makes a trader earn nothing but just losses.

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Quote from: Jegileman on July 01, 2024, 01:46:54 PM

A profitable trader will not base his or assumptions or pure analysis of the market on just technical analysis because after dip consideration into the market, you’ll find out that it is not just the technical analysis that determines the market. It is base mostly on past analysis but that doesn’t quantify it to not be enough or be enough to place a trade on. You have to look into other factors that can affect the market and changes around it overtime.

Looking at past market can give you insights on what the market to come will look like but looking into other market analysis like fundamental analysis, news and other information that can affect the market is important. You might get your analysis well and want to place a trade on it, but with one part of it going wrong, you’ll miss out on the trade or can still correct after incurring some losses. Trading is not easy, so you’ve to be one step smarter than the market always.

There is no doubt that it is not easy to trade, it is very difficult to become a trader, everyone goes to the market, every day new entrants are added to the market, there are many people who come here and think that they will trade and walk away with a lot of profit, but that is not the case. It takes years to learn. I have seen experienced traders sitting with two or four-year-old records open, that coin indicator set. They do candle management and many people can tell the market condition by looking at the candle. These people did not become so experienced and wise in a few days, they also took years to learn, while living in this market, they faced a lot of losses and a lot of gains.

This is the reason why it is said that if one wants to be a successful trader, he should be aware of the market moment by moment and keep an eye on the good side. If trading was so easy, then everyone would be a trader and there would be no such thing as poverty in the world.

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Quote from: Jegileman on July 01, 2024, 01:46:54 PM

Quote from: KupaCrypto on April 01, 2024, 05:18:26 PM

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.

A profitable trader will not base his or assumptions or pure analysis of the market on just technical analysis because after dip consideration into the market, you’ll find out that it is not just the technical analysis that determines the market. It is base mostly on past analysis but that doesn’t quantify it to not be enough or be enough to place a trade on. You have to look into other factors that can affect the market and changes around it overtime.

Looking at past market can give you insights on what the market to come will look like but looking into other market analysis like fundamental analysis, news and other information that can affect the market is important. You might get your analysis well and want to place a trade on it, but with one part of it going wrong, you’ll miss out on the trade or can still correct after incurring some losses. Trading is not easy, so you’ve to be one step smarter than the market always.

You would really be able to realize for yourself on how you should really be gonna dealing up with this market on which it would really be needing up that kind of versatility when it comes to trading
strategies on which you would really be needing up to consider on the moment that you will really be stepping your foot into this space. Just like on what most people or posters saying above that
it might not be reliable but it is really that something better rather than on taking up trading positions without any analysis which is really that attached. There would really be that significant difference between things
and if you wont really be that mindful about on that aspect then you wont really be that finding yourself to be that much effective into this market.

They might not be that reliable but doesnt mean that it wouldnt really be useful on which it would really be rather the opposite. Majority will really be taking this as a common
tool on the moment that they would really be dealing up with this market.

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Quote from: KupaCrypto on April 01, 2024, 05:18:26 PM

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.

A profitable trader will not base his or assumptions or pure analysis of the market on just technical analysis because after dip consideration into the market, you’ll find out that it is not just the technical analysis that determines the market. It is base mostly on past analysis but that doesn’t quantify it to not be enough or be enough to place a trade on. You have to look into other factors that can affect the market and changes around it overtime.

Looking at past market can give you insights on what the market to come will look like but looking into other market analysis like fundamental analysis, news and other information that can affect the market is important. You might get your analysis well and want to place a trade on it, but with one part of it going wrong, you’ll miss out on the trade or can still correct after incurring some losses. Trading is not easy, so you’ve to be one step smarter than the market always.

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Quote from: KupaCrypto on April 01, 2024, 05:18:26 PM

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.

You are right that traders should not 100% rely on TA but you are not right about the fact that its an assumption about the past data, because what actually drives the value of a coin, news, or the buyer or sellers? Let's say you are focusing on buyers and sellers so you will do TA. How other or most of the traders (Buyers and sellers) will do trading, they will also set some charts and will follow the lines they have made.

Let's say out of 1000 traders 890 or 900 traders made a chart with the same resistances and same supports, so they all will follow there plan and when they will react market or the price of the token in question will react as well. So, that means you have to set some resistances and supports or other TA to analyze what other people might be thinking so you could outsmart them in trading. Outsmarting is what can make you more profit. So better to learn TA but yeah not rely on it fully, add FA with it as well.

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Quote from: GbitG on June 30, 2024, 03:43:54 PM

Hmm, that's absolutely right!
I agree with you that only relying on Technical Analysis is always risky because, As you have said that the level of accuracy cannot be seen only by technical analysis because the market can change its direction at any time. So that's why I also believe that the market should be seen not only from a technical point of view but also from a fundamental perspective. Technical Analysis tells you from the previous data that its previous performance has been like in the past. So if this data is taken as final then it can give you the wrong accuracy for this current sentiment. Because it is past data and it cannot give you the same performance in the future.

So, I agree with you and my opinion is that in trading, a person should not depend only on the technical perspective but should also have a fundamental perspective. Because Trading is based on two main pillars, one Technical and the other Fundamental.

Without understanding both, there is a much higher risk of losing because market conditions can change at any time and this is where knowledge of both is needed. Technical Analysis is only used as a consideration where the previous condition of the coin in the market will show changes at any time with the level of maturity before someone makes a study of fundamental analysis. Why trading considered difficult because the market can change so quickly and relying completely on Technical Analysis will not help in certain conditions.

Apart from considering Technical Analysis and fundamental analysis, we also need to control emotions because emotions often influence people in making decisions. If in these conditions people experience panic then it is certain that decision making will be greatly disrupted and could influence trading in a direction that will result in losses.

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Quote from: MarjorieZimmermanGinger on June 30, 2024, 12:03:34 PM

That's why trading is said to be risky because the level of accuracy cannot always be seen from technical analysis because the market could change direction.

Hmm, that's absolutely right!
I agree with you that only relying on Technical Analysis is always risky because, As you have said that the level of accuracy cannot be seen only by technical analysis because the market can change its direction at any time. So that's why I also believe that the market should be seen not only from a technical point of view but also from a fundamental perspective. Technical Analysis tells you from the previous data that its previous performance has been like in the past. So if this data is taken as final then it can give you the wrong accuracy for this current sentiment. Because it is past data and it cannot give you the same performance in the future.

So, I agree with you and my opinion is that in trading, a person should not depend only on the technical perspective but should also have a fundamental perspective. Because Trading is based on two main pillars, one Technical and the other Fundamental.

Topic: Why technical analysis is not reliable (Read 1070 times)