Sorry but TA is worthless, divergence is moronic. Just watch price, it will go up and down in waves, sometimes it will have momo behind the waves, to push it higher and higher, when so only play long side. Market is going up, pulls back, pauses as it attracts buyers, get in low tight SL in its buyers range, it will either hit SL or move up, try to make more from the move up, than the SL will cost you. Candle sticks, rsi everyone is using them and everyone is losing, don't follow. And remember, everybody lies!
Love that quote about everyone lies. TA isn't worthless, it's just nearly worthless for what most people use it to do, to predict the direction of price in the trade at hand. So I'm not really disagreeing with you, I am a TA trader, and I have one foot in both camps, TA is worthless (most of my weight is on this foot) and TA isn't worthless, the distinction is what you are relying up TA to do: Technical analysis is just a tool, not an edge. TA offers five gifts: 1. It measures what the market is doing 2. It spots divergences (yes, I know you don't like this, but I do. There's no difference between observing price doing something you find predictive and observing a divergence you find predictive. A guess is a guess. (Argue that I'm wrong, all I know came from arguing with smart people like yourself). 3. It makes a prediction 4. It structures a trade in the form of an entry point, stop loss, and profit target 5. It tells you when you are wrong. By far, the weakest of these gifts is the prediction, the chief virtue of which is it gives you enough faith to pull the trigger, and almost no edge at all in terms of probability (hence your comment, TA is worthless) The strongest of these gifts is knowing when you are wrong. The days of TA giving you a big edge in prediction are long past, but that doesn't mean this tool is worthless. Trading is about being on the right side, but it's also about timing your trade. You can't make money without understanding trend and range, and I know no other way to survive volatility than to use TA to understand what you need to prepare for to survive. Summary: Long winded argument outside your observation that TA can't pick the right side. Agreed, you are 100% correct, it can't.
Correction. 1. It measures what the market WAS doing ( not valid for future ) LOL Prediction, is the enemy, totally, generally people try to predict a bottom in a down move and fail multiple times, rather than just join the down move. Just join, what ever the market is doing, no TA required. I use Envelopes for Trend and Range to judge my trades, still a guess most of the time, but I like to think educated guess ( as posted on my Journal earlier )
So many things to respond to, I am reluctant because something in my response will likely offend. Let us begin with I agree. However, much of what I believe about trading is conditional, so when I say anything, you could get your feathers ruffled when we are still in agreement. Therefore, let me be specific about specific points (well, as specific as someone who has ingested four chardonnays). 1. "It measures what the market WAS doing." Yes! Absolutely! I can't tell you how many times I've tried to explain to traders that when we use our indicators to predict, they either lag or they guess, there is no in between when it comes to prediction. Of course, you can use them to measure other things, like divergences, overbought/oversold/whatever, but then we are evaluating using TA for other things, and that's where it really shines. (Before you criticize this point, yes I know measuring noise for divergence is a fool's errand, because if it's just noise, there's nothing to measure) 2. If there were one statement that characterized me as a trader, you just uttered it: "Prediction is the enemy." Peter Brandt, the commodities trader who has averaged better than a 40% gain over three decades. He said there's no reason a trader who took the opposite side than I did in each and every trade couldn't enjoy the very same success that I did. Trading isn't about prediction, but everyone is stuck on prediction. Sir Belvedere to King Arthur: "Who are you who are so wise in the ways of science?" - Monty Python and the Holy Grail Seriously, how do you know this stuff? How long did it take, who did you study under, where did you learn this? It took me over ten years and easily 20k hours, and I am a distrustful curmudgeon.
As long as you don't go stupid and start correcting my spelling or grammer, we can be trading buddies LOL 1. Yep ( falling asleep ) 2. Other side is valid, if they both kill there losses earlier and let profits run, they will both make good $$$'s Which at the end of the day is key. Also over 10 years here, distrustful bum for me. I'm not a good day trader though, beat swing trading years back, but haven't got the time / like the day trading challenge, so trying to beat day trading BIG style, like 50% per month growth ( till max Lot size is hit ofcourse, then 50% and bank it repeat! ) Dump prediction and go with the flow, which is created by the last news event or the expectation of the next news event. SLEEP, night fellow geek!!