A problem with Technical Analysis?

[Lamont_C]

Quote from BenChi:

"BENCHI----Make up your mind. If you knew when to get out of a loser and when to add-on to it, you're saying that you can precisely forecast the market,"

I don't see how i'm being inconsistent here - i didn't claim to be able to forecast the market - all i said was that i did not think that price action alone was enough of a basis to make a decision because one would have no basis on which to hold a position that has run against them

- if one understands enough to have a fair sense of an insturments value - then one can determine when to hold on because it is undervalued, or cut because value has fundamentally changed.

To a technician, however, the "value" of a stock is whatever the buyer is willing to pay for it and the seller is willing to accept. By introducing fundamental notions of "value", you are enabling yourself to make the same errors that beginners have always made, e.g., averaging down, hanging on to losers, failing to apply stops, etc.

Again, what you proposed in your first post is not a problem of TA but of the practitioner.

LC

 

[kut2k2]

Quote from BenChi:

One of the problems I see with using Price to gauge the strength of a market is that it does not give the technician any sense of value. If you put on a position based on the strength of a market as determined by its price, you have no reason to have any confidence in your position as it runs against you. The position running against you means that the market is now acting 'weak' thus eliminating your original reason for putting on the trade.

If markets reward those who are able to go against the crowd - if they reward those who are able to stick to their guns in the face of adversity - then traders need to have enough confidence in their analysis to hold their positions in the face of adversity and adverse price movements- imho price action alone does not suffice.

-ben

The real problem with TA is a slew of halfwits and conmen who insist that they can substitute voodoo for solid mathematical reasoning. 'Twas ever thus. The very nature of TA makes it a magnet for sophists.

 

[marketsurfer]

Quote from kut2k2:

The real problem with TA is a slew of halfwits and conmen who insist that they can substitute voodoo for solid mathematical reasoning. 'Twas ever thus. The very nature of TA makes it a magnet for sophists.

yes. the nature of TA attracts those who want a quick fix--"hey, all i need to do is look at a chart"---what can be easier??

well, the guys at wildly succesful from a marketing standpoint--wizetrade--reduced looking at a chart to red light, green light so i guess anything is possible! LOL !

soon, if capital lasts, they will understand.

regards,

surf