Does Technical Analysis Work? That's like asking "Does this screwdriver work?" It's a tool. Use the right tool for the job. That's it. Quite, quite, simple. Using a screwdriver where a pair of pliers is needed? Won't get it done. Using a straight-blade where a Phillips is called for? Won't get it done. Using a watch-sized screwdriver to tune a carburetor? Won't won't won't get it done. Yet, we see shit like this everyday in trading -- with camps claiming "I made moneyyyyy!" and others decrying the bad joke of T/A. There is absolutely Nothing new in T/A for the past nearly-half-century. Nothing. It's just moving averages on prices+volumes of trades gone by. That's it! No miracles. No magic. Meh. I'm over it, as are so many of you. The T/A I use has helped me trade; it helps me today. And given that I will test its continued utility each and every day, it should help me tomorrow. If you don't have either the brains or (better) the gumption to tightly examine the underlying assumptions and do your own calculations on any T/A that might sneak onto your (precious!) screen real estate, then you deserve to lose money. Blunt, but there it is.
Learning to read and understand price development and then developing a trade plan from such requires a lot of work. If you don't care to do that work then go ahead and say it doesn't work. For you it's true. For those of us, and there are many who trade strictly from charts and have done the work...it works quite well but don't expect to get there by reading a couple of books and buying a trading course or two.
I have a ..... slightly ... different view. For me, "I hate questions." And so, when I have a question, I go hunt it down, thrash it around, pose a strawman, and beat the crap out of it, looking for a robust answer. In current lingo, I Science shit. And so there's the rub: what I put into a solution (to a question/issue/area-of-uncertainty) might be big -- hours and hours and hours. But what might need to reproduce results to demonstrate my "answer" to you? Might be a single picture. "Gimme 5 minutes." Rigorous testing; *easy* to explain. There's a simple metric that's been very handy: Can you code it? Even taking "code" very flexibly: can I enact my 'solution' in a generic, outcome-blind fashion, and come up with satisfactory results? And sure -- in an *ultimate* fashion, Can I code this into (for example) the IB TWS_API, and trade profitably as per prior analysis? For example: the so-vaunted, much-maligned MACD: *Few* T/A tools garner more attention. Yet anyone reading this post can spend 5 minutes looking at S&P EOD data, tuning the three MACD lookback parameters a scootch, and make profitable trades on a fixed system, over the last 3-5-10 years. AND with much reduced drawdowns than buy&hold. WTH?? How that doesn't "work" beats the bejebus out of me. So, Can you code it? If you can, you've done some good science. If not, you're doing religion. (And good luck with that.)
I cannot agree with that. I cannot code the way I trade (because not enough programming knowledge). So I showed in realtime a few trades to somebody that I know for years, that I can trust and who has over 20 years experience as consultant in the IT business, working mainly for multinationals. He has automated programs in Tradestation that switch on and off automatically and that send each trade to his watch at work. His conclusion was: fairly complex to code it, and more important, what I showed that day was only part of the whole system. The major problem was not the programming, but first make an inventory of all possible scenario's that can happen. I tried already many times to write down all the scenario's but never succeeded. Even not with help of the IT specialist. I trade based on logic, so I have even no clue how many scenario's I have. When you have a few parameters it can quickly run up into millions of theoretical combinations. To master that, logic can quickly filter out where to go, but I experienced that writing it down is impossible for me. Theoretically you can program everything. But there is a difference between theoretically and practically. Is it then religion? I don't know, but after more the 20 years of daytrading, and being consistently profitable for over 10 years, it is for sure not just luck. If Jesus or Mohammed is helping me then it might be religion. If I ever find out if that is the case, I will let you know.
This is not a valid suggestion b/c it can't be proven theoretically or experimentally. Would you be able to prove your claim?