Is technical analysis getting the recognition it deserves in university studies?

Discussion in 'Professional Trading' started by marty_f, May 2, 2007.

  1. marty_f


    While charters are level-headed as fundamental analysts in the real trading world, they are rarely mentioned in university studies. Even if they do, they are often criticised by most academics.

    Obviously there is a good reason that fundamental analysis gets a bigger mention in university studies as it is also useful for a lot of non-trading related financial activities.

    However, I hold a strong view that technical analysis is not getting the recognition it deserves in university studies. Should they not have done any trading themselves, a lot of students would have walked into an investment bank trading interview, answering “I have never learnt about technical analysis”, or “I was taught that technical analysis is only for the unwise”. And that would be a disaster if the interviewer is from a technical discipline.

    Elitetraders, please feel free to express your view or to debate on this issue. I also wish to know how technical analysis is being taught in top schools around the world.

    Academics, students, investment bank traders, independent traders are most welcomed.

  2. I know some well known universities do offer technical analysis classes (they fulfill some credit requirements) for students in the School of Business or the likes.

    However, these are fairly new classes since 2000.

    Thus, like any other new type of class being introduced into academics at universities...

    They don't get the same recognition as the other traditional classes...classes that's been around since most universities had their first classes involving business, economic, finance et cetera.

    Simply, it's going to take time and only after some well known professors or PhD students begin writing academent studies or research about Technical Analysis that's much more than just indicators.

    Therefore, by the time our your toddlers get to college...

    I wouldn't be surprise if universities are offering 4 year college degrees in TA and post graduate degrees in the field of TA.


  3. Sounds like TA is getting the recognition is deserves :D
  4. TA is a dangerous cult - at best a pasing fad, at worst junk science. :p

    But it works :D
  5. They said the same thing about the stock market when it was first formed.

    They said the same thing about exercise and athletics as part of universities when it was first formed.

    I believe they said the same thing about rock n roll (there are some famous rock n roll folks with degrees in music) when it was first formed.

    By the way, TA has been around for a very long time going all the way back to the late 1690's for use to speculate on rice futures in Japan...

    It became popular in the 1700's.

    Heck, I don't think rock n roll has been around that long in comparison.


    P.S. I don't know when TA was introduce to the stock market in the U.S. but I suspect it was at the same time when the stock market was formed.

    Now that it can be used to satisfy academic work at prestigious universities...give it another 10 - 20 years when we'll start to see college degrees being offered in Technical Analysis.

  6. TA has been thoroughly tested by many, and almost always it is shown as having little to no value.

    It deserves to be thrown out of university studies.

    Do you ever notice that TA studies shown in mags like TASC or Futures never show rigorous backtesting over a broad range of instruments over a long period of time?

    TA is mostly used by believers, rather than good traders.
  7. 1. I doubt it will ever receive significant academic endorsement... it's too enigmatic.

    2. TA is difficult to backtest because "things" work differently depending upon the psychology of the market at any given phase.

    Probably <.1% of market players "really" understand TA.
  8. I have added Technical Analysis to the classes I teach. It deserves a place in financial education just like fundamental analysis.

    Technical and Fundamental analysis are the same thing, looking at past data and trends to make a forecast or determination of future price action. Just because one is looking at earnings per share versus historical prices does not make one better than the other.

    Also, most people, including many here use technical analysis INCORRECTLY. Many expect it to be a black box system which tells you specifically when and where to go long or short and when to get out. These are the lazy traders usually looking for the quick fix and have no desire to work at it.

    That is why TA studies are flawed and an embarassment for the academic community. They take one indicator and test it over 30 years and go long or short if X happens and then show that over 30 years it performs no better than the index. I disagree. Anyone who trades an indicator this way should LOSE money since it is a stupid way to trade. No one should simply go long or short using one indicator without any further analysis or study or even input. This is the biggest flaw in "Random Walk Down Wall Street".

    technical analysis is a means to analyze the price action that is occuring on the chart, to measure the movement strength or trend, to try and formulate patterns and weed out some of the price action noise. It is a tool the trader needs to use to analyze what is happening and thus make their own decision as to what is more likely than not going to happen and invest or trade off of that analysis. The TRADER has to make the prediction or directional bet, not rely on TA to spit it out like a black box.

    Fundamental analysis is no different, you don't simply look at EPS growth and decide to go long or short on objective random criteria. You use EPS growth as one tool in analyzing the stock to make an investment decision.

    People want proof that TA works but it is like asking whether a hammer works. If you know how to use it correctly and dont expect it to do the work for you, then it is a useful tool. Asking whether it works is asking the wrong question. Asking whether it helps you better analyze the price action and history to make trading decisions is what TA is for.

    Therefore, sinec it is widely used in the investment world and widely used incorrectly, I make it a point to teach it as ONE tool in the arsenal of investing and spend even more time to ensure that people understand it is not a crystal ball or predictor but merely an analytical tool and the individual is still the ultimate decision maker in whether to go short or long.

    It is not a question of whether it works because it works perfectly. TA does exactly what it is supposed to do. Moving averages show a moving average of the price. Bollinger bands show changes in volatility. Oscillators oscillate. Support/resistance lines show areas where buyers or sellers outnumber the other and win. In that sense TA works perfectly in producing a number or graphing a value. What is required is for the investor to make some sense out of this analystical data and trade off of it. That cannot be taught specifically, only guidance recommended. The student must learn how to use the tool for themselves just like the painter can be taught what a brush is and how to apply the painit and mix it but must ultimately learn for themselves how to apply the tools correctly.

    Fundamental analysis is the same thing. we can all learn financial statement analysis but what good is the data if the person has no idea how to analyze and interpret it to make a decision for themselves.
  9. GTS


    If there was actually a mechanical TA system that was proven to have a significant edge in an academic study you can be sure that it would stop working shortly thereafter (once it became widely known/published)

    People that have a working mechanical TA systems have no motivation to share them with the academic community. Unlike many theoritical research areas, this one has real immediate financial implications and publishing a system is akin to killing it (which is opposite what happens with other research where publicity is a good thing)

    Therefore I don't see how TA could ever get real academic respect.
  10. I have not met any academics that actually trade with any significance beyond buy and hold. I trade full-time and teach on the side. 95% of academics in finance teach and rarely trade on the side. Therefore your assessment of academics view of anything used by full-time traders is correct :D
    #10     May 2, 2007