New study says: Technical Analysis is garbage

Discussion in 'Technical Analysis' started by Daal, Oct 19, 2009.

  1. Daal


  2. They only looked at equity markets? And what's the point of looking at 100 global equity markets when the correlations between them are 0.8-0.99? Obviously these guys are ivory tower types who had a lot of time to waste.

    Their analysis seems to single out absolute returns, not risk adjusted returns. Technical analysis (IMO) never claimed it is designed to double your returns. The idea (IMO) of technical analysis was always to enable one to achieve better risk adjusted returns over a full market cycle. E.g. I'd gladly accept returns that are lower by 15% (compared to buy & hold) if I can cut drawdowns and volatility of returns in half.
  3. Pekelo


    When I saw the title I thought: Oh God, Surf is back...

    Without reading the link, there is a thingy called OVER-fucking-GENERALIZATION....

    Let me explain: Some TA is garbage, some TA is excellent.

    Is there anything else to discuss? Oh yeah, the gem:

    "...we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation."

    Maybe they should have studied the other 27 000 trading rules too... :)
  4. Arnie


    In the hands of a good trader, TA works. In the hands of a loser, it doesn't. It really is that simple. I think the reason is that a good trader knows what he is looking for and uses TA to help. The typical loser TA trader thinks there is some magic order that can be found via retracements, MA's, occilator's etc...He really has no clue, that's why he is so enamored of TA.
  5. Nattdog


    there is no type of analysis that is inherently profitable.
  6. CET


    It is a tool like everything else. Folks think they are going to find never-fail tools and can't adapt to the basic risk management concept.
  7. Gotta agree.
  8. So what the hell is the alternative? Fundamental analysis? Get real for once.

    The author already admits to the fact that TA works in conjunction with good money management, or is he? I say those who equate moving averages as the final arbiter of technical analysis are idiots to begin with.
  9. maxpi


    My wife consistently wins at slot machines.. Her intuition tells here when to quit a machine and her intuition tells her which machine is good... I suspect that there are a lot of traders large and small that have that intuition. Likely they couple it with some TA that gives them a small edge + some money management.

    There are chart engineers that have nailed an edge, tested it, traded it for a long time, automated it maybe.. they didn't click on the link to the article...
  10. Daal


    This is not right. As far as I'm aware the only way to win at slots is when they are the 'jackpot' types where a certain % of the money gets accumulated overtime and at certain point the machine achieves positive expectancy. If she is 'winning at it' she is lying to you. Sorry to destroy your marriage. If she had this kind of magic power she would own the world and be banned from Vegas
    #10     Oct 19, 2009