My only complaint with traders who are 100% TA disciples and dont give a squirt of piss about FA is apparently they feel the tail can wag the dog. The tail being a price line on a chart,and the dog being the state of the company itself...healthy,unhealthy,etc. THE TAIL CANNOT WAG THE DOG!! ( If you're an intraday scalper disregard that statement,it doesnt apply to you)
Prove to me that Technical Analysis Works.
- Thread starter TazTheLaz
- Start date
When it comes to TA, as a #1-rated TASC readers' choice author on the subject, and real-money trader who did $41M worth of live trades in 2021, a few points:
- trade management, position sizing and price action are far more important than anything else
- things like range, vwap, higher than average volume are critical
- the purpose of TA should be to help with decision support, "signals to trade vs noise to ignore"
- crossover signals like golden/death 50/200sma are useful because other traders use them
- squiggly lines on charts are the least important part of profitable trading
- range is everything; looking for out of the ordinary breakouts, and gap fills like GPS SNAP is useful
Bottom line is TA is just one tool to use in combination with risk management/tight stops.
Fundamental analysis/pe ratios, forward guidance etc is less than worthless to active traders.
Small stops are everything.
- trade management, position sizing and price action are far more important than anything else
- things like range, vwap, higher than average volume are critical
- the purpose of TA should be to help with decision support, "signals to trade vs noise to ignore"
- crossover signals like golden/death 50/200sma are useful because other traders use them
- squiggly lines on charts are the least important part of profitable trading
- range is everything; looking for out of the ordinary breakouts, and gap fills like GPS SNAP is useful
Bottom line is TA is just one tool to use in combination with risk management/tight stops.
Fundamental analysis/pe ratios, forward guidance etc is less than worthless to active traders.
Small stops are everything.
I'm probably the worst trader on elitetrader or even the whole internet!
By 'worst' i don't necessarily mean that i'll get it wrong every single time and lose money on 100% of my trades, but I mean that i've been straring at charts for 12 hours per day and trying to find an edge and tested stuff and live traded and demo traded for about 11 years now. (also bought courses etc of course)
11 years. Full time. 12 hours days. Trying to learn to trade and still not yet profitable
I'd began to assume TA was most definitely just nonsense (i began thinking that about 5 years in) although in recent years i did find some people who can prove without doubt that they make very good money and they apparently do actually rely on TA to do so
By 'worst' i don't necessarily mean that i'll get it wrong every single time and lose money on 100% of my trades, but I mean that i've been straring at charts for 12 hours per day and trying to find an edge and tested stuff and live traded and demo traded for about 11 years now. (also bought courses etc of course)
11 years. Full time. 12 hours days. Trying to learn to trade and still not yet profitable
I'd began to assume TA was most definitely just nonsense (i began thinking that about 5 years in) although in recent years i did find some people who can prove without doubt that they make very good money and they apparently do actually rely on TA to do so
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Why anyone should prove to you that something is working?
There is no value in doing this.
There is no way to prove it without exposing a holy grail. And a holy grail worth big money.
If someone offers like $10000, I would open a thread right here to prove it.
There is no free lunch.
Or anyone pay a $20 monthly fee at collective2, I would perform the strategy that at least earn 500% annual profit consistently.
You want proof, you need to pay.
You want to see a holy grail, you need to pay.
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There are two groups of traders responding in this thread for the reason "running 9 pages of comments" as you noted...
One group seems to be emphasizing daytrading/swing trading is profitable while the other group seems to be saying that you can be a profitable trader while using technical analysis...each group would have a different way of verifying such is true.
- Thus, I asked the OP to explain what he means by proving that TA works that would be satisfactory to him/her as proof...no response from the OP...
Oddly, the few that did respond and explain in great detail, some would provide proof and suddenly the OP would move the goal post and then continue requesting additional verification information.
- In fact, you get clues about this (moving of the goal post) in the OP opening message post when he begins identifying "line on a chart" then he navigates to "TA", and then he uses the phrase "super-rich"...then he circles back to comparing line on a chart to rich investors (not traders) that uses fundamentals and a team of insiders to help make them rich.
Simply, there have been threads like this (many of them) in the past by thread starters with the hidden agenda of trying to gain access to your trade method...your hard work while others solely had the agenda of playing a game just so that they can move the goal post.
- Some doubters would have the audacity to post their email address in the thread and ask people to email them the details of their trade method so that the OP can test it...to then never be heard from again.
Some members even requested ET management to create a private section of the forum for the sole purpose of sharing trade methods...as you can see...there still is no such private section and never will be because they view this Technical Analysis section as nothing is wrong...
In contrast, not much sharing anymore...just 9 pages of discussion and still running.
wrbtrader
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At this point the extent of your arguments that TA cannot work is that you can't find the rationality or logic behind it and you have never heard of any rich user of TA.
I do use TA and do so because I have found that it works, but I am on the alert for signs that my results might be statistically random or I have just been plain lucky. But as a starting point against the effectiveness of TA this just isn't worth taking seriously (unless you have a reasoned argument and evidence).
The stockmarket is pretty logical. Just because some people who are very lazy do not take the time to educate themselves about technical analysis and learn it, they assume everyone else is an idiot like them. Nothing could be farther from the truth. In any field, you have the real experts who know what the hell they are doing as well as the legions of ignorant people who may have agendas to push. Stockmarket players consist of the smartest traders and hedge fund managers with the resources to succeed. They have an army of analysts and millions to spend knowing anything about any stock they are interested in. You think the retail traders can outsmart them and beat them? No way in hell you can. Even the Wallstreet Bets crowd found out the hard way. The two hedge funds who borrowed stock to short GME and AMC lost because the risk profile of borrowing stock to short is unlimited to the upside. They let greed outsmart them. Other hedge funds piled on when they saw the two hedge funds make that colossal mistake. Those are where the billions they lost ended up going to. Some retail traders got lucky and earned millions from GME and AMC. Most though, lost monies that they can ill afford to lose. Technical analysis could have saved a lot of those retail traders if they understood it and knew how to use it properly. If you still doubt it works----good luck, you are going to need it.
So you still need TA as that is the basis on which you do statistical analysis.
You need the two to make things work.
Don't give away the secret.
You need only price, but that price should be the basis of the analysis that gives you the info you need. Price on its own tells nothing as it is just a continuous stream of numbers.