is trend following a form of TA? I checked the MTA website and they do not address the question. What is the official stance? Thank you, Michael
Thanks. Not sure I understand. TA is used to identify trends or reversals, but is it TA? I know this seems to splitting hairs, but the people I work for are interested in this kind of thing. Thanks again Michael
I feel like you must know this answer already, as I suspect you are another screen name for market surfer, but here it is. Trend followers base all their trades and systems off price action, which is technical analysis.
From John Murphy's book technical analysis is defined as the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. There is the key difference. Predictive vs following. Alot of the "tools" in technical analysis books are centered around prediction vs following. A classic example of this concept would be the idea of a price target off a head and shoulders top. A true market technician would set a price target based on the size of the formation and forecast the most likely next "leg" the market would goto. A true trendfollower would never set a price target, they prefer to let a trailing bar stop take them out of the market when prices start to reverse against them or someother similar method. You can use technical analysis "tools" to help you follow the price movement and act more like a follower or you can use technical analysis tools to help you predict, the choice is yours. Another important point is that if someone told you they were a trend follower, that would imply that they are that type of trader. Technical analysis is a wide concept that would need to be refined in order to generate a particular trade system. Hope this helps.