the basic assumption of TA

Discussion in 'Technical Analysis' started by seesound, May 29, 2005.

  1. seesound


    Many technical analysts believe that the chart tells us everything including the fudenmentals.

    I agree with it insofar as charts(indicators) may reflect the information in the PAST. However, charts just cannot reflect the information in the FUTURE. In other words, good pattern has nothing to do with the future bad news. TA just analyzes one of the aspects.

    Just when I was typing these words, I came up with the thoughts that TA just gives you a higher chance of being right given anything else constant. am I right? just cannot figure out it thoroughly.

    I am just a new comer to the trading world and soemtimes a bit critical and curious about whatever happens in the trading. Thank you for your patience and enlightenment.
  2. TA is just one element to consider in a trade, but it's wise not to assume that it automatically gives you a "better" chance at evaluating future price action. With chart data and indicators so easily obtained these days, those who trade purely on technicals are usually behind "the curve" and can probably be considered "the crowd" when it comes to most setups. You never know what the biggest players in a market are trading off of these days, but it's probably not connecting highs and lows or broken necklines.
  3. trader99


    Yeah good point. There could be hidden information flow and deals not so readily shown on charts. Look at GM. Tank. Drift lower. Paus. Then GAP up to destroy so many hfs short GM.

    That was a side deal by K.
  4. TA purely and simply is superstitious numerology packaged in wildly misused mathematics by illiterate charlatans to extract money from the guileless who are grateful to be parted from it.
  5. Wrong.
  6. Brandonf

    Brandonf ET Sponsor

    I think there is some of that, however you would be missing a lot of the picture by not looking at a chart. Even Jimmy Rogers, no fan of technical analysis, admits to looking at a chart to "see where things have been". I believe that by following the charts day by day you can get a better fix on what the market is looking at and where things MIGHT head as a result of that. Certainly nothing is 100%, but by using a chart you can get a good fix on an entry and exit, there by allowing you to keep the odds stacked in your favor as you by the stocks in good companies.

  7. kut2k2


    Don't hold back, tell us how you really feel! :D :D

    TA purely and simply is just analysis of price action and volume action. A great deal of that "analysis" is just as you described. But not everybody looking at price action and volume action is an innumerate idjit. :cool:
  8. izeickl


    In the same essence is fundemental analysis not just a judgement of past and current performance? If you make a judgement on a companys cash flows, p/e, product/customer base or any huge number of things, your counting on things following a pattern developed in the never know what will come in the future (i.e. a drug companys main cash cow suddenly being found out makes you grow fingers on your back).
    Even mechanical systems, are made from historical data, and your counting on a continuation of the market action...but as we all know market action changes and these systems can become worthless.

    In summary.....insider knowledge is only way to go! :D
  9. seesound


    I somewhat disagree with you. My stance is that TA tells you some important things especially the momentum of the market. Momentum takes time to fade out.
  10. j1900q


    Beauty is in the eyes of the beholder. Same is true for charts. It seems enough people see the same things, at different times to make patterns work. some are early, others wait for confirmation. The ones who get in early have nice profits and are able to sell to the folks who have waited to be sure. Not to say the ones who waited are wrong, the early birds maybe just bought a false breakout. Charts work, if you put time into the study it takes to find what works, and when it has the best chance of success. IMHO
    #10     May 30, 2005