Hi, Whether TA works is always a subject of debate. I just have a question: if you dont use TA (in the traditional sense i.e moving averages/trendlines etc) what do you use? The way i see it is if you aren't looking at a chart to pinpoint an entry you are either randomly guessing, using fundamental analysis or using order flow. Guessing> ok i doubt anyone does this Fundamental analysis> i cant see how this is effective on an intraday level without ridiculously wide stops. How do you know what price to get in? Scalping> if you can do this then thats great but scalpers looking for one tick isnt what is moving the markets, its the big players making predictions on future value of the commodity and so its wise to join them So we are left with people looking at charts i.e technical analysis. Have i left any approach out? I'd be very interested to hear from any intraday traders that dont use TA take trades. For what its worth i have this to say. I have recently started trading with a firm and am just graduating from "trainee" status and have met a lot of great traders with a variety of trading styles but i have to say the most consistent traders that all make money year in year out for decades on end all use TA. That isnt to say that it is the holy grail though because a lot of traders fail and 2 traders can trade a similar style and have totally different results, the difference between the successful and unsuccessful is discipline and money management, i think we have all called the market right and ended up losing money because we got shaken out of a position/didnt stick to our plan etc. When this happens its easy to say this or that doesnt work but very often its your discipline or money management that isnt working. So please let me know of your alternative approaches to TA im genuinely interested Cheers
Remember you are limiting your question to daytraders only and daytraders pretty much use TA. You cannot make braod sweeping generalizations if all you are talking about is daytraders.
I trade news events, they are catalysts. I look at the charts but I don't make trades based on TA alone.
Someone above said that daytraders use TA? Not any successful daytraders that I know. Granted some might plot moving averages, but real TA is of greater use to swing traders (oscillators, multi-time frame analysis, MA's). I trade solely off of the Opening Range and the Daily Pivot Range. Before you scream, "TA!!", I'll say that I ONLY enter trades based on the tape. Daytraders who know how to read the tape, in my experience, have a much higher rate of success since you can see when a level is going to be penetrated rather than just giving away money by getting stopped out.
Tape reading is helping to find entry points but the "levels" you are talking about are still derived from price action as in TA, especially pivot points. There is nothing wrong with that, but no need to deny that TA is being used.
Suppose you watch a highly correlated product. When it ticks up, you buy the one you trade. That's not TA is it?
If you are taking past price action to calculate a correlation as a basis for buying the one you trade, isn't that a form of TA? Using past price action and finding a pattern and trading off of it?