Technical Analysis Doesn't Work

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There isn't much actual debate to be had on this subject..

As has been stated before, technical analysis is simply a set of tools. In the hands of professionals, the tools of technical analysis produce good results. In the hands of amateurs, I think the best we can expect is a lot of whining and complaining..

This is just one of many threads started by a retail trader who probably does not have the talent necessary to make it work.

I wonder if anyone remembers "Ripley" and his thread where he states that "no one can make money in the markets":D

or "Peterfigliozi". a former Marine who posted here a while. We corresponded by PM and posts here and in a short while he had a winning method using TA. By the way I don't attribute my input to his success. HE took the initiative and learned on his own. Hard work and talent...

The question is why does TA work for some and not for others.

Talent, hard work, perseverance, personal responsibility...some have it, some don't....

Steve
 
The consideration of Price action, free of all indicators or other philosophies mentioned above, is not included in the definition for purposes of this thread. This seems to be one of the few ways that many successful traders use that actually works.


As alluded to above, most technical indicators are using price as part of their calculation. For example, if a stock makes a large sudden move in one direction, it's pretty simple to know what an overbought/oversold oscillator indicator like macd or stochastics would be telling you, even without using the indicator.
 
Quote from phillyflipper:

"Then price action becomes the technical indicator....but you knew that...right?"
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Price Action "IS" a technical indicator and TA.

And Jack . . . you are spot on too.
 
Yes, of course. But with one distinction..

It is the evaluation of price that is the "technical" part of TA..

and one more thing..."indicators" which derive their utility from price, are descriptive not prescriptive...Indicators simply describe what is happening. THAT is why much of the value of TA is lost on naive users. Markets are still (and will always be) driven by human intention....even where the majority of volume is by programmed execution. Again it is how you orient yourself to the market and how you use the tools that determines success.
 
While I use RSI in only limited form

I won't be so closed minded to say that no one can find very good signals using common indicators (excluding price)

Yes even finding an edge not based on TA is possible

all you seasoned traders out there, don't be too closed minded, you are not THE best and you haven't seen it all

By the way, Gnome, you can use wireless internet safely, just turn the hub off at night and make sure you have a software installed that lets you know if anyone else is connected

you can't rely on given encryption alone to save you

(I used to be a hacker) :)
 
Well, I've developed a daily system for swing trading and a longer-term system for position trading based on weekly data. Both use whether the RSI is above or below 50 as one of their inputs.
Where did I get that idea? From The Encylopedia of Technical Market Indicators, which concluded as a result of their own testing that this was the only truly useful way to use it.
I tried my own tests, and found they were right.
So, I disagree that TA has no value.
 
Quote from jack hershey:


Could you post a set of rigorous evidence that is accepted by other knowledgeable individuals in the investment community that supports this view.

Then we can begin this thread with a hypothesis. So far it is only a limited unsubstantiated opinion.
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Fine, the Aronson book can be a portion of the basis. But this statement is true for anyone making an originating post.

http://www.amazon.com/Evidence-Base...9860706?ie=UTF8&s=books&qid=1184637836&sr=8-1

As well-described by one of the reviewers:

<i>In this thought-provoking work, David Aronson tests more than 6,400 technical analysis rules and finds that none of them offer statistically significant returns when applied to trading the S&P 500. This result, presented at the end of his work, is not disappointing to dedicated students of technical analysis who draw from the book not a new trading technique but instead take away a new, and more effective, approach to system development and trading. Those seeking the single best indicator or day trading pattern will be disappointed after reading Evidence-Based Technical Analysis, just as they will be disappointed in their trading until they advance beyond seeking the Holy Grail of Trading. </i>
 
Quote from steve46:

There isn't much actual debate to be had on this subject..

As has been stated before, technical analysis is simply a set of tools. In the hands of professionals, the tools of technical analysis produce good results.

Steve
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See reply to Hershey post. This is a belief, not a proven reality. There is little evidence that the "professionals" use pure technical indicators or the other methods as described to any benefit whatsoever.

Stating this remains an unproven. Throwing in the snides also does nothing to provide evidence against the assertion.
 
Quote from D2.0:

The OP must be gathering scathing evidence as we speak...
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Well, those in favor of the OP TA description have come up with nothing evidentiary yet in this thread, so not seeing much to fight against.
 
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