The problem with Techincal Analysis

Discussion in 'Technical Analysis' started by jbob, Nov 17, 2007.

  1. jbob


    The problem with TA is that you can always come up with some reason (or excuse) why price continues or reverses at whatever price. Things always make sense in hindsight. Oh, wow, I should have bought because the stochastics crossed over, we bounced off support, support broke, adx was rising, volume was breaking out, bollinger bands were containing price, price was riding the BB's, the gap was filled, no we're having a runaway gap, look a big divergence, oh wait, multiple divergences, must be a big buy now, blah blah blah.

    I think I've heard it all. The problem is that there is so much TA BS out there that there is always some excuse why price did what it did. However, the problem is trying to take advantage of the situation where certain patterns provide an edge. However, every edge seems to have a short shelf life as the market is always changing as it cycles between trend and range.

    Could someone please enlighten me into what works.
  2. Combine the right interpretation of price action and a classic TA pattern and you'll have yourself a high probability setup. Take the exact same "appearing" TA setup but the wrong corresponding PA and you'll have a setup of low probability. The problem is that most people either dont know how to read PA or dont want to and only want to trade TA setups. Charts will print the same patterns over and over but its understanding HOW the chart was printed that will lead you to know when a trade is worth making and when its not.

    Note: I posted this earlier today in another TA thread, thought it was applicable so I cut and pasted it.
  3. As my latest gangsta rap CD will be titled: Mo Money = Mo Mentum

    Momentum is great. Just catch the move based on velocity and then get the hell out....something starts moving, most of the time it's gonna take a little time to decelerate.

    Stick n Move. Stick n Move.

    (BTW I am a 2-10 day appx hold time trader, so "stick n move" may sound funny coming from me, but it all depends on your perspective)
  4. humans! that's what!
  5. ganesh6



    What exactly you mean by 'price action' .