TA debunked

Discussion in 'Technical Analysis' started by bashatrader, May 21, 2012.

  1. In my opinion, all analysis that uses price as the sole input is technical analysis.

    I use a combination of technical analysis and statistical analysis both on a micro and macro level and it works for me.

    I don`t know the academic studies of technical analysis in depth and exactly how they are conducted, but if they simply propose to buy or sell a breakout or a moving average crossover, I can tell them in advance that the result would be that technical analysis does not work. To me, it seems like the academics are the ones that are naive.

    It is simply not that simple and more filters and knowledge would be needed in order to profitably trade a breakout strategy. Not all breakouts are equal and different markets behave differently. Some markets are more prone to breakout than others and quite often fading a breakout is the profitable trade. A simple filter that would increase profitability is to enter on the pullback to the area price broke away from provided that it now acts as support or resistance, i.e., let price tell you that the breakout was real.

    Money management is obviously also crucial.

    I do however agree with the article that it is madness to believe one can make money after a 30-day crash course in technical analysis. It takes a lot more than that. :)
  2. Academics are naive but traders using TA are even worse bacause they get no fixed monthly sallary like them.
  3. kut2k2


    Academics are oblivious of the TA that works, so their "tests" are always laughable.
  4. "While we cannot rule out the possibility that these trading rules compliment other market timing techniques or that trading rules we do not test are profitable, we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation during the time period we consider."

    They tested 5000 trading rules! And that is TA? Stuff like MA cross overs and percentage moves from highs and lows. So they learned TA from what - extracting 5000 rules out of 7000 rules and running a back test on each and that is real TA?

    So to learn this version of TA, take an idiot who can code signals like a MA crossover, give him the rule book and a week later call him a technical analyst? So it doesn't work? What a shocking surprise. So that free software I downloaded won't make me a millionaire after all?

    Oh my goodness - all the tax dollars wasted in education. It shows you how some bright people can be educated out of their intelligence with a computer and a big rule book. That is so pompous.

    So if I did 5000 tests on how metal can be bent, hinged, welded, cut and shaped and I didn't end up with a car a week later then car designers are wasting their time?

    This is so stupid it needs to be in the ET Idiots Hall of Fame.
  5. simpleRT


    Having great technicals is good, but the most important thing IMO is to develop some good market common sense which only comes with experience...

    Those academics are idiots... Every trader knows that most EMA crosses upward occur into resistance, and downward occur into support... There are some EMA strategies that work but they involve chasing a move and capturing the end of it as it slams into support/resistance.

    Your too late to capture much of a trade just watching EMA's...
  6. LOL!!! :D
  7. #10     May 25, 2012