Quoting from the paper: Good thing I didn't read this in the morning, I woulda spit my coffee all over the monitor...
If we are talking about two methods of study in which lead to the placing of a trade; Technical Analysis or Fundamental Analysis, you are using Technical analysis. If you want to call it quantitative analysis or clownfartpenis analysis or whatever else, that's fine. This basically just comes down to semantics really. Some people are just so set in their ways that TA is just MACD, RSI, Moving Avg's and the like and nothing else. I believe that, if you aren't trading off of income statements and balance sheets (financials essentially), then you are trading off of SOME form of TA.
Dumbass, you just TOLD me that options pricing is NOT based on fundamentals....hence you are using some form of TA to make your trading decisions!!
"In markets such as Australia and Austria the most profitable rule is from the Support and Resistance rule family. In both cases the rule only signals a total of 4 trades in the entire seven year period. The average number of days a trade is open is 431 in the case of Australia." Well spotted Peta. Made my day and worthy of the Jokes2 thread. If he was a day trader he'd spot S&R once every month.
Inputs common to virtually all options pricing models - underlying price and historical volatility - are at least partially a function of FA. Therefore options pricing is also at least partially a function of FA.
There are quite a few papers on effectiveness of technical analysis. "The Profitability of Technical Analysis: A Review" says there are over 130, and that was in 2004. There are many arguments both for and against. At least one has to consider that shorter timeframes might be more influenced by TA. The paper linked above, "Technical Analysis Around the World", studies trading systems with buy signal and sell signal, usually spaced by a holding period. (And finds TA useless.) Whereas the paper "A Non-Random Walk down Canary Wharf" studies effectiveness of next day trading only. (And finds TA useful.) The Profitability of Technical Analysis: A Review http://papers.ssrn.com/sol3/papers.cfm?abstract_id=603481&rec=1&srcabs=566882 Technical Analysis in Financial Markets http://papers.ssrn.com/sol3/papers.cfm?abstract_id=566882&rec=1&srcabs=1181367 A Non-Random Walk down Canary Wharf http://mpra.ub.uni-muenchen.de/9871/
you know for many years i wonder why don bright is so anti TA i have tried to prove time and time again to anyone that not only does it work but you can do it automatically like a money machine. so don dont like ta maybe he dont swing that way? but i love ta guaranteed 100% red blood guy i am. lol without ta i guess don serves a purpose to the market - liquidity
There is a boatload of papers on SSRN defying the non-sense that is the Efficient Market Hypothesis. Classic TA is only one piece of the picture.