Someone mentioned a 'definition of TA' in another thread. I thought such a thread might be of interest, rather than the usual 'TA works/doesn't work' type. But will surely lead to that!
TA measures what the price has done, not what the price will do. People who think a market is going to "bounce" or some other reaction because of an indicator is delusional. There is a multitude of factors that go into what makes the market move. TA reacts to the market. The market doesn't react to TA.
Technical analysis is any method for generating trading signals, said method being based solely on past and present price data and/or volume data of a security. This includes both quantifiable and unquantifiable methods, including mathematical formulae (RSI and ADX), trendlines, pattern recognition (wedges, triangles, flags, head-and-shoulders, etc.), candlestick interpretations, etc. TA is a broad collection of methods, some logic-based and others purely intuitional. Note well: it is literally impossible that academia has tested all methods that qualify as TA and found them all wanting. Therefore academic studies claiming to "disprove TA" are bunk. All they can do is focus on some narrow aspect(s) of TA. Based on the studies I've seen, many studies are doomed to failure just on the basis of poor risk management (all-in trading is a frequent assumption among academics).
What's your definition of TA? In my view anything found..., or used on a chart - is TA Yes it works - 100% of the time RN
Seems like a case of little red riding hood being tricked by the big bad wolf. What's the source of the qoute? Thanks!