Prove to me that Technical Analysis Works.

[zghorner]

Not to mention that NOBODY notable has gotten super rich off of TA.

lol, damn you are an ignorant nincompoop. Richard Dennis borrowed $1,600 in the 1970s and turned that into ~$350 million in about 6 years using ONLY TA trading commodities.

Look what Paul Tudor Jones did on black friday...using technical analysis.

the further towards an investor you go the more fundamentals come into play...IMO traders very much can utilize TA for setups.

 

[deaddog]

Please explain to me, with logic, how TA is supposed to work.

A chart will show me what price has done in the past.

The market (investors) react to fundamental data by changing the price they are willing to pay for securities.

A chart gives me a visually pleasing way to see how price is reacting to whatever fundamentals are available.

I can make my trading decisions based on what I perceive to be repeatable patterns.

Am I 100% correct? Of course not. That's where managing risk and keeping loses to a minimum comes in.

I am not a long term investor. I am not willing to wait until other investors see the value in a stock.

I avoid fundamentals because they may give me a bias that causes me to stay with a trade that is moving against me.


The only Buffet rule I try to live by is Rule #1, "Never lose Money". I don't always succeed but I try to keep losses to a minimum.

 

[virtusa]

The stock price can deceive you. Ever read Irrational Exuberance?

No, the price can never deceive you. The price is always right and the only element that decides if you make money or not. The price is the only element in a buy and sell that has an impact on the result. The result is the difference between the buy price and the sell price.

 

[TazTheLaz]

If you belive that, TA can never work for you.

...and it's true?

 

[SunTrader]

No, because Citadel is a market maker, and they have much better data than anyone else has access to. Quant models aren't the reason they make money, volume data and buying data is, though.

Jim Simons is RenTech not Citadel. Ignorant about that as well?

 

[smallfil]

TA doesn't work.. from you typical indicators...it's trash.

Technical indicators do not work. Technical analysis does. Two different animals. You are comparing technical indicators which measure price movements vs technical analysis which analyzes the entire stockchart. You obviously, do not know even the difference between the two.

 

[maxinger]

I refuse to believe that a line on a chart can explain the entirety of a company. It defies rationality and logic. Not to mention that NOBODY notable has gotten super rich off of TA. On the other hand, fundamentals have made several people rich (Warren Buffett, Charles Munger, Bill Ackman, Carl Icahn, etc.).

Please explain to me, with logic, how TA is supposed to work.

I don't care if it's the VWAP or a moving average, just explain to me how a line on a chart will predict anything beyond a vague guess.

What a foolish request. Fundamentals works for you. Go use it!!! Then money will fall from the sky.

TA wouldn't work for you. Stop trying to find evidence it will work.

 

[nooby_mcnoob]

I refuse to believe that a line on a chart can explain the entirety of a company. It defies rationality and logic. Not to mention that NOBODY notable has gotten super rich off of TA. On the other hand, fundamentals have made several people rich (Warren Buffett, Charles Munger, Bill Ackman, Carl Icahn, etc.).

Please explain to me, with logic, how TA is supposed to work.

I don't care if it's the VWAP or a moving average, just explain to me how a line on a chart will predict anything beyond a vague guess.

You don't need to "prove" it via evidence, you can deduce it via logic.

For sufficient levels of liquidity, the chart reflects prices people are trading at.

If the price is going up, then people are buying. Or there are fewer sellers than buyers.

If the price is going down, then there are more sellers than buyers.

When people with money buy or sell stocks, they tend to believe their entries are fair value and thus may buy more if price retraces back to their entry. This creates potential levels of support. How do you trade this? Do you buy the support? Only if you're a fucking moron. No, if your theory is that there is potential support there, then you need to see robust support FIRST before you buy.

You can develop entire strategies that work, just by using logic.

 

[virtusa]

No, because Citadel is a market maker, and they have much better data than anyone else has access to. Quant models aren't the reason they make money, volume data and buying data is, though.

So Citadel told you their secrets?
Or is it hearsay? Like Amber Heard's lawyer would call it?

 

[DaveV]

My background is programming, so when I first started using Technical Analysis I downloaded a TA library from https://www.ta-lib.org/ and coded tests using over 70 different TA indicators. I ran thousands of tests, varying the holding periods and the TA parameters for each indicator. I could not find a single TA indicator that would beat S&P buy and hold.

So you would think that I would have dismissed TA. On the contrary I am a heavy user of TA. I don't use it to predict the future, I use it as the best tool to tell me what has happened. Specifically I use the math behind TA to tell me when to close out transactions. It is not unusual for me to have 50 to 100 outstanding transactions (long and short) at a time. I use TA math to calculate the slope of the outstanding transactions that are falling or rising fastest to determine which transactions should be closed out immediately, or which to hang on to.