Topic: Why technical analysis is not reliable - page 5. (Read 1011 times)

You cannot be 100% certain by doing technical analysis or any other analysis. Through technical analysis or any other analysis we can only predict that the next movement of the market may go in a certain direction but we are not sure that the market will go in the same direction. Many times it is seen that the market goes in the opposite direction of what we predict by analyzing the technical analysis and the market chart well. Sometimes there is so much bad news in the market that usually our analysis does not work properly. If a candle is four to five times larger than the normal way the candle fluctuates, then the prediction we made will not be correct because the market will suddenly move much higher. So, if you can analyze it correctly, it may match the market changes to some extent, but not completely match your analysis.

But for me, technical analysis is the nearest way to trade and support your analysis. It's not guaranteed yes, but a lot of professional traders use technical analysis for a living, cryptocurrency or not cryptocurrency technical analysis really exists.
Just think that trading will not give you a 100% guarantee.

One major problem with most technical trades is that they tend to rely on their predictions about the market other than supposed reactive , Also never forget that traders emotion plays a key role in determining trend, this is why you experience sometimes a sudden market change in direction, take you for instance, you might decide to buy a market but price reverse, this is where you as a trader suppose to react, so there are couple of reason why we have stop loses. Therefore, as a trader if you want to get the best out of market you must combine both technical analysis and the fundamental analysis, both makes what we call market analysis.

Still TA must not be underrated either, TA is the best tool we have available to predict what the markets may do, and while it is true that TA is based on the past actions of the markets, what else can we use to predict what the market may do other than its past? So while anything can happen, even things that we have never seen before and which could make any prediction useless, at the same time we do not really have any tool that can come close to predict what the market could do with the same accuracy of TA.

Well, your topic centered on technical analysis. Before now I have read some comparison between technical and fundamental analysis. Later I began to read about psychological analysis. All these tools do not make 100% sense independently, as they need each other in order to make a complete sense. Whoever is an expert on technical analysis should also know a bit of the fundamental analysis and vice versa. When there is a news in the society, you will understand that the chart will start tilting towards the news in the fundamentals. This is also applicable in the order way round. But then, the power of technical analysis should not be overemphasized. The knowledge of the charts and candlesticks is very important in cryptocurrency trading. No matter its limitations, its advantages overwhelms the limitations.

Really not that reliable but something that you could really be able to mainly make use with once you do hover yourself into this market on which it would really be just that a normal approach that you would really be having considering that this market is never been that predictable in the first place. You cant really just that make yourself that putting up some entries or exits without plotting these indicators into your chart. Yes, it doesnt really give out that precise prediction when it comes to trading. It would really be that still relevant no matter what. Try yourself on hovering into this space without using any TA's on which you would really be having that hard to know on to set up your entry points or even exits. Basing or depending about news or fundamentals isnt something that you could really be able to see on everyday on which it would really be that a normal
approach for you to make use the other way around.

You would be able to see its relevance once you do make yourself that get lost or doesnt know on what you could gonna do with the market on trying out to predict prices on where it could
potentially go.

Anyone saying the technical analysis is not reliable is not an informed trader because it is so reliable to me. Of course, I can't expect 100% success from it, and those traders who could possess a technical strategy with at least 75% winning should have the reliability with management, needless to say, some traders are still getting 95% or more from their technical analysis. So it is all about you, what you know and how you use what you know.

About your points, let's look at them one after the other;

1. You are so wrong about this. For it to use the past details to predict the future outcome doesn't mean it's bad, especially when you use the support and resistance strategies, including price action on the higher charts. That's its principle of operation, and the market is dynamic itself and it always respects the past records you are downgrading. And it respects it mainly because the market itself in the absence of new economic data/events, dances to the tune of the past records since it is not the market that trades itself, it is people who trade it. So, since people read the past record to predict the future and invest/trade due to that, the market often moves in that direction.

2. Yes, this point is valid. We have many traders all over the world and many would read the market differently. Above all, the main trend often prevails, so be a good trend trader. And if at all you would try a retracement/reversal, be a very good support and resistance trader. Also, to avoid any issues during the bad days use the right risk management.

3. I like you to know that all the burdens of trading should not rest on the shoulders of the technical analysis because it is merely a chart reading. How can't it know the economic happenings? But surely, it often adjusts itself on detecting them if you are a good chart reader. I see this often and change my stance if it has affected the initial market pattern. As the market is dynamic, the readers of the trading charts should be dynamic as well.

Anything that uses past/historical data as a basis or predictor for future outcomes is always unreliable. If you want to predict the price of a coin in the future with certainty, you'll also have to predict the dynamics (including crypto events) that will happen in the future, which is impossible. Therefore TA always comes with probability, and the longer the time frame, the higher the deviation.

It is all fortune telling. That's what TA essentially is. However, that doesn't mean it is completely crap. It has its uses but it is not the main deciding factor when making trades. Let's say it is just another tool in the toolbox which has many and more important other tools. I would rather try to guess the macro economics in the world instead of relying on TA. To me, the interest rates in the US are far more important than the most famous TA indicator on tradingview. Or the situation in Ukraine and Palestine for that matter.

It is exactly because majority of traders see these past trends and know these past market trends, that makes it relevant. Traders see it and understand the implication on the market, and the appropriate reaction to it.

Do not trade against the trend, the trend is your friend.

This is why every trader should make it to habit to always verify the trend of the market through technical and fundamental analysis and not just technical analysis alone.

i think it's just this time of the market that TA might not be reliable since the market touches the ATH pre-halving, there is much adjustment in the charts after halving. and then you can add up the Bitcoin ETF that is making the investor bullish to the highest level while the global economy is also in bad shape. 

but usually, TA is reliable. the time however is not reliable but when the printing goes brrr and inflation is unstoppable, anyone who holds cash will lose money and the only way to win is to invest.

Some other methods of analysis that a trader can adopt to be successful at both short, medium or long term investments may include fundamental analysis and in some cases also, sentiment analysis. I think sentimental analysis is mostly employed by forex traders as compared to crypto traders.

However, while the Fundamental analysis speaks on the economic factors that can affect the currency prices, and is most useful for long term investments,
Technical analysis is more efficient for short term trading and market timing, because it sets its eyes on the past price movements of the market and then try to predict the future price action before taking one on the instant.

The Sentiment analysis aims to share scope on how the psychology of a trader could affect his/her trading decisions, just as the name implies.

If a trader can learn to consult and combine all these three analysis before conducting trade or making investment decisions, am very certain that loss would be minimal and incomprehensive.

Maybe the full details can't be given, but at least it can give an individual trader an idea of the trading activity on an exchange. Maybe it's not right to say that it's not reliable, because if it really isn't reliable, don't use it.

But how do you read the graph on the exchange price coin if you don't use it? What will you use for fundamental analysis? Will that be enough for you to determine the direction of the price value of the coin you are trading?

So flipping coins would have the same efficiency, not that I am against those percentages  


Yes, it does, just because traders keep looking at indicators like gamblers look at time forms or past results doesn't make one more accurate than the other, TA is based on past events, and since the past is past and nobody can predict the future TA is efficient only if history repeats itself.
So if Kane doesn't score in the third match two goals after not scoring two goals in the previous two matches that's just an accurate prediction as saying Bitcoin will never reach a new ATH before halving cause it didn't do it in the previous three.....ups!  

  

One thing to note here is that no method of analysis that is actually 100% accurate and reliable. Moreover, it depends on each individual trading pattern and preferences. It's all about sticking to the method that works for you either fundamental, technical or any other methods. Sometimes, analysis is just a minor issue and doesn't necessarily matter but what is more important is your designated strategies and how you can stick to it. You can not just be jumping in and out of trades by using any method of analysis without a clear strategy.

Each of these methods of analysis has their own unique role and advantages. They are helpful in decision making process for both investing and trading but they are not guaranteed for profits because market study is more than just analysis.

You know that's why there are stop limits being placed with every trade? To make sure that the amount that a trader would lose would bee capped to a percent that would be acceptable to the trader. Trading is basically one that you cannot predict 100% of the time that's why it's important to have risk management and not always go in on something and be sure that you are going with it strategically.

Technical analysis can't be 100% accurate. In fact, it is not supposed to be anything.

You have charts, and graphs, and other signals as an analyst. Those are all datasets that already happened, it's fact you can't change.

Analysis is based on them, but always using your own 'bias' and 'opinion'. You can use someone elses signal, but it becomes their bias and opinion. You can use AI but it becomes analysis based on algorithm.

So of course none of them become 'accurate'.

Analysis is supposed to just give you predicted direction. Instead of random guessing. Calculated risk is still a risk

That's why there are other tools used by traders, such as "indicators,"  "trends," and, of course, the current state of the economy related to a currency. If it's crypto trading, then news about the currency and the "trend" is one of the tools being used by traders.

it doesn't mean that a traders is using technical analysis is that they are plotting their chart pattern based on the previous movement of the currency, that's not the always case, it depends on what kind of trader are you, and depends on the market time frame, I'm not a very expert traders but I know the basics and beyond that, so if for you technical analysis is not reliable then try to trade without one let's see how can you trade without reference or guide, technical analysis is surely not a 100% accurate but this tools is used in order to have a reference or hint on what will be the next movement of the market, and their assumption or predictions is being used with thinking and fair decision making.

Those traders that doesn't use risk management, what might be their reason?? Can we call it greed or risk taking because most times it pays off,  it's cool to take risk I mean a risk you can bear,  just like gambling you don't stake an amount you are not ready or will I say willing to loose, but in all I will always advice every trader to back up their trade with a plan B, that is where risk management comes in, in other to be on a safer side of the trade.

Trading is risky itself.

Technical analysis can not  help traders to exclude risk from trading.

Technical indicators can be manipulated by whales and they can set up their games by bending indicators to make most of market participants to believe that a next market movements will be like what is written in books.

At the end, they turn it around and the market will move oppositely against what is thought and believed by the crowd. Traders will be killed and liquidated if they use leverage with strong belief on technical indicators and analysis.