Just my own observation with client work over several years - many traders that I have crossed paths with are using technical analysis studies incorrectly. There's quite a bit of ignorance and misapplication in the field of TA. That's what I've seen - YMMV.
I agree, I don't know any trader that does not use it in one form or another. Maybe I meant to say that pattern recognition is hard to weed out from randomness. I myself always like to graph a chart see where a stock has been, momentum etc.. however I think pattern trading will diminish in the future as we see the world become more computerized. After all TA was invented before we had computers and since computers were invented it has been a controversial topic.
I suppose the first forms of TA-based trading were a) buying because price has been rising, and b) buying because there'd been a pull-back in a series of rising prices. These forms wouldn't even depend on graphics, just sight of daily closing prices, which is all traders had at one time. These are simplistic techniques, they're not strategies, but its hard to see them disappearing. If these simple TA forms still have relevance, then so do their corollaries, and these allow slightly more advanced TA - a) set a stop-loss and target at levels where price was previously failing to rise - we now call that resistance b) if trend reverses and price falls back, or a new pull-back in an uptrend occurs, buy at or near the same prior lows, because if price rose from there previously, its at least 50% likely to do so again - we now call this support Once you accept trend, support and resistance as being significant, all the chart patterns that I can think of are justified to some extent. What patterns don't derive their significance from combinations of these factors?
All depends of yor knowledge (or lack of it) and what and how you do. If you do the wrong thing, the result will be accordingly. This is you: This is me: Willy, what you posted is silly. So you did not steel your name.
Thanks for the laughs. If you can make money trading with TA then I really can't judge. Maybe im just sour because TA never really worked out for me.
I'm sure most people use TA wrongly. Most new traders appear to see an uptrend and immediately shout "Whoopee! How can I get short on this?"
I believe since our births we are forming rules on how to live including how to trade. We all trade from birth till death and most are not a where. You trade a smile in hopes of brightening up someone else's life or your own, you trade work for dollars, trade dollars for products(someone else's work) and on and on. We all should be good at trading but really few accomplish it well enough as we usually muck it up in beginnings cause of emotions for most part. I became a chartist first, not cause it made sense, but I was lucky home computers were not available when I started, and I have had to become good at the standards and then discover many patterns not listed in books, more rules. More TA came out with advent of home PC, pretty pictures for way too many, can't see the bars, overkill for most part and yet most never back test it in full economic cycles, but they plan their vacations well. Whether your lines are good or not, all that matters is consistency of drawing them, and if able to code them, they will be. How you enter a trade for anything other than scalping is less important getting lowest low or highest high, but how you manage the trade, and where many many spend least amount of time, I was in same boat many years ago. You are right to a degree, wherever you stick on that line don't matter, but how you manage the trade does. But charts for different users give a road map if you can read what is going on, but again it is the individuals set of rules. I can read the Financials well of companies, get into areas of true debt/revenues/sales/tax write offs to determine their future, but guess what, that stock will go up and down on other's sets of rules. It takes years/decades to truly see what you never saw long ago, to see and read probabilities and stats tested patterns work based on where they were on a chart and forward tested to prove to oneself they "might" work in the future. The following is patterns based on either numbers or letters, can you read it? I thought it was fun to do, it is just having set of rules of understanding the finer points of a language. TURN YOUR BRAIN AROUND THIS ONE...(YES!!) Here’s another trick from the Doctor to test your skills...Can you meet this challenge?We've seen this with the letters out of order, but this is the first time we've seen it with numbers.Good example of a Brain Study: If you can read this OUT LOUD you have a strong mind. And better than that: Alzheimer's is a long long, way down the road before it ever gets anywhere near you!7H15 M3554G353RV35 7O PR0V3H0W 0UR M1ND5 C4ND0 4M4Z1NG 7H1NG5 !1MPR3551V3 7H1NG5 !1N 7H3 3G1NN1NG 17 WA5 H4RD BU7 N0W, 0N 7H15 LIN3 Y0UR M1ND 1S R34D1NG 17 4U70M471C4LLY W17H0U7 3V3N 7H1NK1NG 4B0U7 17, B3 PROUD ! 0NLY C3R741N P30PL3 C4N R3AD 7H15 ! PL3453 F0RW4RD 1F U C4N R34D 7H15. To my 'selected' strange-minded friends: If you can read the following paragraph, forward it on to your friends with'yes'in the subject line . Only great minds can read this. This is weird, but interesting! If you can raed this, you have a sgtrane mnid, too! Can you raed this? Olny 55 people out of 100 can. I cdnuolt blveiee that I cluod aulaclty uesdnatnrd what I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it dseno't mtaetr in what oerdr the ltteres in a word are, the olny iproamtnt tihng is that the frsit and last ltteer be in the rghit pclae. The rset can be a taotl mses and you can still raed it whotuit a pboerlm. This is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the word as a wlohe. Azanmig huh? Yaeh and I awlyas tghuhot slpeling was ipmorantt!
The lines were inaccurately drawn or the price chart? The chart was generated from a gaussian with drift. Random numbers. How can it be inaccurately drawn?