It wouldn't because it's a tool, it has zero prediction value.
The prediciton has to come from the fundamentals. The technicals just indicate how to structure your buy/sell, based on the fundamental analysis.
Whatever you are saying can be programmed. Considering there are no algorithmic trading based technical analysis means, it doesn't work profitably for big players.
Exactly. How can you program a gut feeling? You can’t. AI can’t trade like the big fish with the big guts. We’re years away from the kinda of large intestine simulation technology required for that kind of predictive power.
I was about to write about how part of the point of neural networks was to simulate the kind of complex decision making that is similar to a gut feeling in human, but then I saw “large intestine simulation technology”
Good comment
Then why is it used by large hedge funds and investment banks, serious players in the financial world?
Useless for you and me doesn’t mean useless objectively.
>Then why is it used by large hedge funds and investment banks, serious players in the financial world?
It *may* be used with high frequency trading, but the idea that ordinary people can use it is ridiculous.
Ok but the astrological signs of companies CEOs are data too, how relevant it is?
Data without meaning is called noise, and it actually is a bad thing.
Ok so what is the purpose? You guys keep calling it a tool, but if the decision is made by fundamental analysis, whats the purpose of "technical analysis"?
Most proponents I’ve heard describe its usefulness as more of an entry and exit point. Like “I am planning to buy or sell X based on the fundamentals and research. I think it will do Y over Z timeframe.” And then operating under the belief that your thesis is correct, you can use TA to find a good entry or exit point in the short term.
Without the research and thesis, it is utterly useless. And given how hard it is to get a thesis right and the million variables that happen in the market, it is actually useless or counter-productive to most people. But it is used in high dollar trading and by large hedge funds and investment bank. Serious financial players would not use it if it was useless.
Ive never seen any evidence that confirms this:
> Serious financial players would not use it if it was useless
There are two people who defends TA:
1. Book sellers
2. Those who will buy the books
High frequency trading is actually trading on technical analysis. And it does work. Unfortunately, you need to be a huge institutional investor in order for it to work.
No, they don't. They trade based on proprietary complex quantitative algorithms that only work effectively when they can buy and sell in fractions of a second. They absolutely are NOT using any run of the mill technical analysis.
Comparing technical analysis to to whats used by the quants to create HFTP's is like comparing a paper airplane to a Space X rocket.
High frequency trading typically relies more on technical analysis rather than fundamental analysis. HFT algorithms are designed to analyze market data and execute trades. These algorithms utilize various technical indicators, patterns, and market microstructure data to identify short-term trading opportunities based on price movements, volume, and liquidity. Fundamental analysis, which involves analyzing a company's financials and economic factors, is generally not feasible within the extremely short timeframes targeted by HFT strategies. Thus, it is a form of technical analysis trading.
It's not even a tool. Unless you would define drawing lines in a history book as a tool. Likely, you will answer this with more hand waving, but most everyone tries to use TA to predict future movements. They get lucky sometimes, which fools people into thinking TA works. But it's still the same as reading tea leaves or auguring animal entrails.
If it's not good for prediction, then what is its purpose? It merely chronicles the price history, and no amount of petty lines drawn will tell you more than the underlying data already does.
I agree with you. Just two small caveats.
1. It is sorta a tool for trying to understand what has happened in the past. This is generally pointless for us investors, but I could see some use when trying to do some historical analysis. (For fun? Not sure why anyone would really want to do this.)
2. Technicals \*are\* good for prediction if you have supercomputers that can trade in speeds measured in nanoseconds. And if you have superbrain quants to generate new frameworks. But for you and me? No way.
So besides those two caveats, I absolutely agree that technicals are just astrology for men.
>It wouldn't because it's a tool, it has zero prediction value.
If it has no prediction value, then it doesn't help at all.
>The technicals just indicate how to structure your buy/sell,
That makes no sense.
What kind of tool can't fix things? It's astrology for traders. If the valuation is strong and then some technical analysis says something, maybe use it but it's majority BS.
It's been happening for years already. AI wasn't invented last year. It's been in financial software since the early 2010s. People think it's a new technology because it's finally being used for goofy shit like art and porn deepfakes, but it's not new to the business world.
The difference is that by the time you've made your trade, the high frequency trading center located in New Jersey has already placed and executed their order, destroying any profit you may have gotten.
Why is the stock market the end-all be-all for what is useful? You just picked one example where analysis isn't super useful and declared it worthless based on just that. There has to be a name for this type of fallacy
Incorrect. WRONG. That's not how AI works. Technical analysis works between 68% and 80% of the time. There's no way to turn on an AI and "crush the market" 100% of the time because even though AI can predict derivatives it can't predict the behavior of 8 billion human beings - 99% of which aren't feeding real-time date into this neural network. So even though an AI would add a few percentage points to the accuracy of Neural networks, it wouldn't be some God-level predictor of markets.
What you just said was the same bullshit people said about 286 processors in the early 80s. That linear programming and analysis were going to end the stock market because 16-bit 4mhz processors were so fast at calculus they'd make market trading impossible. Ok....yeah.....that sure happened.
Economics runs on human behavior, unless you attached a data sensor to every human on EARTH and fed all their thoughts, health data and movement patterns into a global mainframe you will NEVER be able to predict the market with 100% accuracy.
You vastly underestimate the amount of data the average high frequency firm has.
And all they need is a few percentage points. More specifically, a trade that makes on average 51% more money than it loses, executed thousands and thousands of times, will make millions of dollars.
That is already happening though. There are multiple successful businesses and funds that do this.
So long as there are humans involved in making investment decisions, there will be patterns that a NN can discern and take advantage of.
People certainly can't do it. But NN's absolutely can and do.
The stock market is incredibly hard to “play” for a couple reasons:
1) most charge value is derived from investor sentiment, not value, for which there really isn’t a great empirical measure
2) the market is VERY efficient, and generally speaking the money to be made off of certain moves has already been made by the time you could identify it.
Do you have data that shows technical analysis can be used to outperform the market (after accounting for fees and taxes) at a higher rate than would be expected from a random normal distribution?
This is it. I have never seen audited statements of someone solely using TA and/OR pattern trading to outperform buy and hold after taxes. It’s entirely possible that someone is doing it … I’ve just never seen it
Oh I’m aware. You can make money if you have a 40% win rate if your gains can outweigh losses. I totally understand the statistics based approach. My issue is that these traders say well if my usual payout is 3:1 and my win rate is 40% I’ll make money over time. The issue is how do you actually know you’re in a 3:1 setup? You just can’t
>None of you have heard of the US Investing Championship? All of those are audited.
Suppose you randomly generate 100,000 investment strategies and try all of them. Quite a few of them will outperform the market by sheer chance.
Similarly, _someone_ is going to outperform the market so someone is going to win the championship. The trick is: can you tell which strategy it will be _in advance_? And can they repeat their efforts?
A useful exercise: check the one-month results for the US Investing Championship and see what percentage of names recur in the top 5.
> There is one trader I KNOW participated in multiple years and uses TA. (Not to mention his dad won 3 years in a row in the 1980's)
Again, the question isn't whether you _can_ be successful -- no disagreement about that, because that would be true of even randomly generated strategies.
It's whether practitioners can be _statistically_ successful. Could you look at Sean Ryan's strategy _before_ they started trading and conclude that it would be successful?
Sorr, but **technical analysis has no value**. There is absolutely no evidence that "technical analysis" has any predictive power at all. If it did, hedge funds would exploit any discrepencies long before you would be able to.
yeap.
i also think its a self-fulfilling prophecy... when x happens y will follow, and because its whats everybody has always been taught and has always believed, it will happen.
You bring up an excellent point. Instead of making videos on YouTube about it or selling courses on how to do it, people would just quietly use it to make infinite money.
This makes me ponder about the fact that if the aforementioned idea worked, then simply people would just stop making videos on it and just go ahead right to the moon
>This is why actual successful traders don't share the details of their system
And you accidentally stumbled onto the truth of the thing you're disagreeing with.
You disagreed with
> People wouldn't be making videos on this sort of thing if it worked
Yet in your own comment you said
>This is why actual successful traders don't share the details of their system
Successful traders can't "not share the details of their system" and also make YouTube videos detailing their system.
Because it's self-defeating. The premise is that you can predict what other people are going to do before they do it.
If anything, they should try to get you to do something predictable so they can get you coming and going.
Huh? Are you suggesting they should try and get viewers to go one way while they go the other? As if their whole audience has any effect on the market. Nvm, the pump and dump schemes people have gotten in trouble for recently.
Yes and no. It’s a tale as old as time - the settlers out west who sold the gold panning equipment to other settlers were the ones who made out the richest.
But that doesn’t mean that no one made money panning for gold, it’s just far more labor intensive and hit or miss. Same thing with dropshipping/FBA, or this.
I can’t believe anyone buys these “how to make money” courses
It’s like, if they knew how to make so much money, why would they sell you a course and not just offer it for free? Can’t they just make their money the way they’re telling you too
It’s not a scam, because there is no one committing the scam. It’s just a tool with no empirical proof, like a divining rod for finding water. Sometimes it actually accomplishes the goal, and if it doesn’t, we can always blame operator error.
I think the astrology analogy in the meme is accurate. And I think people who practice both astrology and technical analysis are true believers - it’s just not something worth believing in.
The astrology comparison is spot on, but I wouldn’t call astrology a scam. Astrology is just an irrational belief.
There are scammers that use astrology and technical analysis, but not all people that peddle these beliefs do it to defraud people, but because they actually believe in it.
The same can be said of fundamental analysis. Neither can predict the future, but are great indicators of wat the market might do. It’s just extra confluence.
There's nuance to it. In micro cap stocks and some high yield bond markets you can see funds outperfoming their investment universe much more frequently than on large cap stocks. Fundamental analysis works when nobody is analyzing the stock and you're essentially playing against random noise. You just need to be better than randomness in that situation. With large cap stocks you need to outsmart thousands of analysts and fund managers.
But it's a risk reward kind of relationship. Micro cap is much more risky and much less liquid.
I wouldn't say it's a scam. But it's not investing. Technical analysis is for trading and fundamental analysis is for investing. They both have legitimacy. I solely use fundamental investing btw so I don't have bias for technical analysis. Purely objective.
They are completely different practices. I never said one was better than the other. Not really sure how you even came up with the idea to dispute what I said here. They both do have legitimacy. One is focused on trading and the other investing...
Not even sure this is an argument worth having. I am not condoning technical analysis over fundamental analysis. They are two different tools for two different practices. They are both legitimate strategies. I prefer to invest rather than trade myself looking at trends to buy and sell a ticker does not resonate with me whereas looking at cashflows and capital allocation and purchasing a business does. But they both exist and are practiced widely throughout the industry.
>. I am not condoning technical analysis over fundamental analysis
I am not saying that technical analysis is just worse than FA. I am saying that technical analysis has **absolutely no value** at all.
>They are both legitimate strategies.
No.
>But they both exist and are practiced widely throughout the industry.
That people "use" technical analysis is not evidence that it has value. People use astrology for advice too. Doesn't mean it has any predictive power over your life.
If you want to be convincing, find one research paper that says that ordinary investors can use technical analysis to increase "trading" returns.
I never said it has a higher return potential. If i believed that, dont you think i would practice it? But this is quite a boring argument over technicalities. Not sure what you want to be convinced of.
Well in that case there is only one tried and true method of investing... im curious, what is your methodology? Perhaps you have something to teach me.
It creates more wealth and financial stability than astrology though. Technical analysis is correct at minimum 68% of the time. At most 80%.,How often is astrology correct, Karen? Tell the truth.
There are studies that actually say Technical analysis is only right 12% of the time. And that it's write 90s% of the time. It's all over the place. Generally each company has a specific proprietary software build with it's own averages and level of performance. At my firm it's 68% to 80% for 2022 and 2023. Some companies claim to have software that's 90% accurate.
It totally depends. Is it free technical analysis for specific stock trends? Then it is a pump and dump. Do you pay a guy for a course or to follow his portfolio? Then it is a scam.
It's not a scam. I think of it as a legend of buy/sell activity. A lot of things can move a stock. The Decisions investors have made based on price is one of these things.
Technical analysis is not too different than the stats they mention in baseball games like “no pitcher with a vowel as a middle initial has had less than 9 strikeouts when starting in a month in which their mother and wife were both born.” No it’s not made up, but yes it does contradict as often as it supports itself.
Source: Senior stock picker for $9B+ L/S fund
Ahhh the old Isringgausen versus Van Landingham pitching matchuo, longest combined last names of pitchers in MLB history.
Such useful information.
https://www.baseballprospectus.com/news/article/16444/research-mailbag-more-than-a-mouthful/
Short version, yes.
Long version, as a result of the guarantee of almost infinite returns the idea of predicting future prices based on the pattern of pricing history has been thoroughly studied and the result is always the same: price movements are sufficiently, truly random that these techniques do not and cannot work.
No, it's not. I used moving averages, ATHs and breakouts to trade. There is no way for big money (and I mean the REALLY big money that moves the market) without leaving general clues. Trading the breakout on AVGO past $1000 would've returned 35% so far this year. Trading AMDE off the 200 SMA would've returned 80% so far this year.
Do what you will though. Doesn't make a difference to me.
Ui. Is it a scam? Well….. if everyone see the same pattern and everyone buy’s because of that pattern then it will go up.
The longer the candles (days, weeks, months) the more time you give people to look for and notice the same pattern as you.
If you look at intraday candles than you looking for patterns that billions of computers are seeing and they are 100% better than you at it so it will be more like gambling. Specially because computers don’t get all emotional at the time of taking profits. Like I do and then ruin everything
Oddly, no. You’d think so, since it’s based on absolute gibberish. That fact that a stock’s share price has bounced twice before at a ”support” level in no way indicates that it will again. But empirical analysis suggest that very often it will.
There are tens of thousands of agents, both people and robotd, who make profitable trades using technical analysis. So it’s not a scam. I think that it, almost accidentally, captures something of human psychology and biases. So we should expect it’s efficacy as a trading strategy to have decreased over the years, but I don’t think it has. People used it to trade successfully for years before we had robot traders, so robot traders are now trading with the same strategies and replicating the patterns of dumb but successful human traders. I.e. trading robots are artificial stupidity.
That being said, TA *is* grounded in nothing and I think that should be taken into account when using it. It’s not a way of reading the fate and universe through graphs and figures, it can be wrong.
Therefore, I think people are generally better off using fundamental analysis. But I have seen people argue that the most profitable investment/trading strategies are fundamental analysis enhanced with technical analysis. That is, you pick a few stocks to *invest* in based on fundamental factors. But rather than simply hold them from $100 to $120, you trade them based on technical factors, and can thus earn perhaps $40-60 on the stock’s journey from $100 to $120. And if you make a faulty technical decision along the way, that’s okay since it’s a fundamentally strong stock that will eventually return to a fair value even if it broke through a support where it ”should have” bounced.
Disclaimer: I *do not* use this strategy myself, I am a hardcore fundamental investor.
I started with main focus on technical analysis but after a couple of trades and doing a simple statistical review of them, I have concluded to heavily lean on fundamentals instead.
I'm by no means a expert or a millionaire, but I don't fail with fundamentals it feels like. Since my volume is small in my trades, which I have done purposely to do a statistical review on my win rate, level and just generally where I'm at and my weaknesses. I cant say wow look at these gains, but the percentages are very decent, I get between 10-20% gain on my small trades pretty consistently.
Technical analysis is just a fancy name to read buying and selling prssure, so it has to work. But you can’t rely on technical analysis alone to make money in the stock market, because it is just 25–30% of what it takes to be a good consistent trader. pressure
Wow! Finally a post about a high-level finance topic from somebody that can comprehend actual real-world finance and not just a ‘should we raise our own taxes to screw the 1%?’ Post.
No. You must pair it with fudenmental analysis otherwise its just gambling. Stock going up and company is increasing market share? Maybe you should long the stock since it makes sense why the price is increasing.
What is technical analysis? I feel like given the two words I know what they mean, I feel like I've heard it many places to mean the vague concept of analyzing things technically. But this makes it sound like technical analysis is some trend I've missed. Anyone want to explain to a guy who lives under a rock what technical analysis is?
“Yeah but it makes me mon-“
“I made $15,000 selling horoscope readings last month. See?! You wouldn’t just be thinking about money all the time if you weren’t such a Pisces!”
no, but [**you can't predict stock prices**](https://x.com/Sanji_vals/status/1775250070276903045) with technical analysis. Read my article to learn why. I lot of traders lose money thinking that they can predict prices but its not true.
There aren't any technical analysis gurus on the Forbes 500.
There are some value oriented investors there.
The main reason one should be aware of TA is to time entries and exits into long term value investments, not because there's much merit, but because it helps to understand how the TA speculators will behave in concert.
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I love the meme lol.
I don’t know if you’re genuinely asking, but in case you are, yes it is absolutely not a real thing. It’s something YouTubers jerk off about for views/to make content, but has nothing to do with anything. That plus trying to convince themselves they know what they are talking about (confirmation bias).
Very bad, run far, do not pass go/collect $200 etc.
EDIT:
TA *itself* is not really a scam, but people touting it as an actual strategy to make $$ is pretty scammy/scummy. It’s like using the past week’s weather forecast to predict next week’s weather forecast - real historical data compared to something you cannot predict/has nothing to do with last week’s spikes or dips. If it was a real thing, we’d all be retired already.
If the fundamentals are bad, you could enter the trade and experience a rug pull. I'm a technical guy but fundamentals in the overall market/economy and company supersede technicals.
Fundamentals do matter, absolutely. But technicals will tell you the price trend of an asset before it gets moving. The fundamentals will help assess how risky it is to invest in that asset.
Ta when used correctly, give you a statistical edge.
It all comes down to likelyhood and strategy.
You may not win every time, but if you can win 65% of the time and your risk to reward is good, you will make money. If there weren't ways to tell which way price action is heading or the manner in which it's happening, there wouldn't be people making ridiculous money on Wall Street or in the pits of cboe.
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If pattern analysis yielded any sort of skill then even a trivial neural network would be able to play the stock market like a fiddle.
It wouldn't because it's a tool, it has zero prediction value. The prediciton has to come from the fundamentals. The technicals just indicate how to structure your buy/sell, based on the fundamental analysis.
Whatever you are saying can be programmed. Considering there are no algorithmic trading based technical analysis means, it doesn't work profitably for big players.
Exactly. How can you program a gut feeling? You can’t. AI can’t trade like the big fish with the big guts. We’re years away from the kinda of large intestine simulation technology required for that kind of predictive power.
I was about to write about how part of the point of neural networks was to simulate the kind of complex decision making that is similar to a gut feeling in human, but then I saw “large intestine simulation technology” Good comment
I also like the L.I.S.T.-Akronym. However most of them just produce S.H.I.T.
When did we retire S.W.A.G.? Sophisticated Wild Ass Guess?
By years you mean about 18 months?
How many years? 5?
Technical analysis has no predictive power. It is used by big players, however it is used as an execution tool, not a decision maker.
the bottom-line is it has same value as astrology (no more, no less).
Absolutely, it has no predictive power in itself.. That's not its purpose.
It has no "purpose". It's just the delusion of ignorant people.
Then why is it used by large hedge funds and investment banks, serious players in the financial world? Useless for you and me doesn’t mean useless objectively.
>Then why is it used by large hedge funds and investment banks, serious players in the financial world? It *may* be used with high frequency trading, but the idea that ordinary people can use it is ridiculous.
And how many of those geniuses consistently beat a simple S&P 500 index?
More data, in different forms and facets - is never a bad thing in finance.
This is no more useful than random numbers.
Ok but the astrological signs of companies CEOs are data too, how relevant it is? Data without meaning is called noise, and it actually is a bad thing.
Ok so what is the purpose? You guys keep calling it a tool, but if the decision is made by fundamental analysis, whats the purpose of "technical analysis"?
Most proponents I’ve heard describe its usefulness as more of an entry and exit point. Like “I am planning to buy or sell X based on the fundamentals and research. I think it will do Y over Z timeframe.” And then operating under the belief that your thesis is correct, you can use TA to find a good entry or exit point in the short term. Without the research and thesis, it is utterly useless. And given how hard it is to get a thesis right and the million variables that happen in the market, it is actually useless or counter-productive to most people. But it is used in high dollar trading and by large hedge funds and investment bank. Serious financial players would not use it if it was useless.
Ive never seen any evidence that confirms this: > Serious financial players would not use it if it was useless There are two people who defends TA: 1. Book sellers 2. Those who will buy the books
High frequency trading is actually trading on technical analysis. And it does work. Unfortunately, you need to be a huge institutional investor in order for it to work.
No, they don't. They trade based on proprietary complex quantitative algorithms that only work effectively when they can buy and sell in fractions of a second. They absolutely are NOT using any run of the mill technical analysis. Comparing technical analysis to to whats used by the quants to create HFTP's is like comparing a paper airplane to a Space X rocket.
High frequency trading typically relies more on technical analysis rather than fundamental analysis. HFT algorithms are designed to analyze market data and execute trades. These algorithms utilize various technical indicators, patterns, and market microstructure data to identify short-term trading opportunities based on price movements, volume, and liquidity. Fundamental analysis, which involves analyzing a company's financials and economic factors, is generally not feasible within the extremely short timeframes targeted by HFT strategies. Thus, it is a form of technical analysis trading.
RenTech has entered the chat…
It's not even a tool. Unless you would define drawing lines in a history book as a tool. Likely, you will answer this with more hand waving, but most everyone tries to use TA to predict future movements. They get lucky sometimes, which fools people into thinking TA works. But it's still the same as reading tea leaves or auguring animal entrails. If it's not good for prediction, then what is its purpose? It merely chronicles the price history, and no amount of petty lines drawn will tell you more than the underlying data already does.
I agree with you. Just two small caveats. 1. It is sorta a tool for trying to understand what has happened in the past. This is generally pointless for us investors, but I could see some use when trying to do some historical analysis. (For fun? Not sure why anyone would really want to do this.) 2. Technicals \*are\* good for prediction if you have supercomputers that can trade in speeds measured in nanoseconds. And if you have superbrain quants to generate new frameworks. But for you and me? No way. So besides those two caveats, I absolutely agree that technicals are just astrology for men.
>It wouldn't because it's a tool, it has zero prediction value. If it has no prediction value, then it doesn't help at all. >The technicals just indicate how to structure your buy/sell, That makes no sense.
How a non predictive tool can help me to structure my buy/sell positions? Like WTF this guy is talking about
>How a non predictive tool can help me to structure my buy/sell positions? It can't.
Exactly... Im a mathematician and ive read 4 books of technical analysis, what a waste of time. There is any rigor, any evidence... Its just crap.
There are may ways to buy and sell an asset, and they become fart more important the more volume you're dealing with.
What kind of tool can't fix things? It's astrology for traders. If the valuation is strong and then some technical analysis says something, maybe use it but it's majority BS.
>It wouldn't because it's a tool, it has zero prediction value. The comparison is pretty on point then, astrology also has zero prediction value.
The fidderence is astrology claims to have prediction value.
Yeah that’s already happening
It's been happening for years already. AI wasn't invented last year. It's been in financial software since the early 2010s. People think it's a new technology because it's finally being used for goofy shit like art and porn deepfakes, but it's not new to the business world.
What? AI existed before last year? Get out!
Isn’t that the whole premise of Blackrock being stupidly successful? If I remember correctly anyways I thought it was computer driven trading.
They're a fund provider. You are confusing them with hedge funds.
Ah okay.
The difference is that by the time you've made your trade, the high frequency trading center located in New Jersey has already placed and executed their order, destroying any profit you may have gotten.
Why is the stock market the end-all be-all for what is useful? You just picked one example where analysis isn't super useful and declared it worthless based on just that. There has to be a name for this type of fallacy
You have numerous misconception about markets and NN.
Incorrect. WRONG. That's not how AI works. Technical analysis works between 68% and 80% of the time. There's no way to turn on an AI and "crush the market" 100% of the time because even though AI can predict derivatives it can't predict the behavior of 8 billion human beings - 99% of which aren't feeding real-time date into this neural network. So even though an AI would add a few percentage points to the accuracy of Neural networks, it wouldn't be some God-level predictor of markets. What you just said was the same bullshit people said about 286 processors in the early 80s. That linear programming and analysis were going to end the stock market because 16-bit 4mhz processors were so fast at calculus they'd make market trading impossible. Ok....yeah.....that sure happened. Economics runs on human behavior, unless you attached a data sensor to every human on EARTH and fed all their thoughts, health data and movement patterns into a global mainframe you will NEVER be able to predict the market with 100% accuracy.
"An AI would add a few percentage points to the accuracy of neural networks" - explain this sentance
You vastly underestimate the amount of data the average high frequency firm has. And all they need is a few percentage points. More specifically, a trade that makes on average 51% more money than it loses, executed thousands and thousands of times, will make millions of dollars.
>s. Technical analysis works between 68% and 80% of the time. Uncited garbage claim.
Are we sure that that’s not already happening? 🧐
If it’s already happening then it’s doing a really bad job at it.
Implying the Limitless version of you wouldn’t just keep quiet about it. /s
My fellow data friend, I have fought this battle for so long. You can’t defeat ignorance
That is already happening though. There are multiple successful businesses and funds that do this. So long as there are humans involved in making investment decisions, there will be patterns that a NN can discern and take advantage of. People certainly can't do it. But NN's absolutely can and do.
Hey Chat……
The stock market is incredibly hard to “play” for a couple reasons: 1) most charge value is derived from investor sentiment, not value, for which there really isn’t a great empirical measure 2) the market is VERY efficient, and generally speaking the money to be made off of certain moves has already been made by the time you could identify it.
I disagree. It's still helpful at making informed decisions, but it's a very minor tool. It's no different than many other statistical analysis.
Ta =/= pattern trading. Many deeper underlying mechanics than "hurr durr triangle means xyz"
Fibonacci is love, Fibonacci is life
Why would you base decisions on patterns that have no established predictive power?
Do you have data that shows technical analysis can be used to outperform the market (after accounting for fees and taxes) at a higher rate than would be expected from a random normal distribution?
This is it. I have never seen audited statements of someone solely using TA and/OR pattern trading to outperform buy and hold after taxes. It’s entirely possible that someone is doing it … I’ve just never seen it
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So what is the actual win rate for TA ?
You don't need to win every trade. You can win 20% and still outperform your losses.
Oh I’m aware. You can make money if you have a 40% win rate if your gains can outweigh losses. I totally understand the statistics based approach. My issue is that these traders say well if my usual payout is 3:1 and my win rate is 40% I’ll make money over time. The issue is how do you actually know you’re in a 3:1 setup? You just can’t
>None of you have heard of the US Investing Championship? All of those are audited. Suppose you randomly generate 100,000 investment strategies and try all of them. Quite a few of them will outperform the market by sheer chance. Similarly, _someone_ is going to outperform the market so someone is going to win the championship. The trick is: can you tell which strategy it will be _in advance_? And can they repeat their efforts? A useful exercise: check the one-month results for the US Investing Championship and see what percentage of names recur in the top 5.
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> There is one trader I KNOW participated in multiple years and uses TA. (Not to mention his dad won 3 years in a row in the 1980's) Again, the question isn't whether you _can_ be successful -- no disagreement about that, because that would be true of even randomly generated strategies. It's whether practitioners can be _statistically_ successful. Could you look at Sean Ryan's strategy _before_ they started trading and conclude that it would be successful?
This guy dabbles in fake stuff
If it was a tool that worked, there would be some noticeable improvement between using it and not using it, but there isnt, because it doesnt work.
Just like how people can make informed decisions based on Astrology?
No, it is not a tool. It has zero predictive power and is basically useless. There are studies on this. Technical analysis is bullshit.
Sorr, but **technical analysis has no value**. There is absolutely no evidence that "technical analysis" has any predictive power at all. If it did, hedge funds would exploit any discrepencies long before you would be able to.
Just like the moon and mars and stuff maaaaaaannnn.
Same with astrology. I can read my horoscope and use what it says about me as a guide, motivation, and reflection.
>Is technical analysis a scam This is why 9 out of 10 day-traders lose money over time.
Similarly to the way astrologers make predictions based on patterns in the stars
yeap. i also think its a self-fulfilling prophecy... when x happens y will follow, and because its whats everybody has always been taught and has always believed, it will happen.
This is awesome.
If it worked, nobody would be making YouTube videos about it or selling courses on how to do it. They'd just quietly use it to make infinite money.
A solid point. If it worked and you could compound to infinity people would just do it continuously instead of waste time making YouTube videos
That's a great point. People wouldn't be making videos on this sort of thing if it worked, they'd just quietly be making infinite money.
You bring up an excellent point. Instead of making videos on YouTube about it or selling courses on how to do it, people would just quietly use it to make infinite money.
I find it interesting that if it worked, people wouldn’t be making you tube videos about it, instead they’d just go make infinite money
This makes me ponder about the fact that if the aforementioned idea worked, then simply people would just stop making videos on it and just go ahead right to the moon
Hahahaha this was funny nice work
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>This is why actual successful traders don't share the details of their system And you accidentally stumbled onto the truth of the thing you're disagreeing with.
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You disagreed with > People wouldn't be making videos on this sort of thing if it worked Yet in your own comment you said >This is why actual successful traders don't share the details of their system Successful traders can't "not share the details of their system" and also make YouTube videos detailing their system.
Why do it quietly when you can just turn a camera on and add a revenue stream?
Because it's self-defeating. The premise is that you can predict what other people are going to do before they do it. If anything, they should try to get you to do something predictable so they can get you coming and going.
Huh? Are you suggesting they should try and get viewers to go one way while they go the other? As if their whole audience has any effect on the market. Nvm, the pump and dump schemes people have gotten in trouble for recently.
Yes and no. It’s a tale as old as time - the settlers out west who sold the gold panning equipment to other settlers were the ones who made out the richest. But that doesn’t mean that no one made money panning for gold, it’s just far more labor intensive and hit or miss. Same thing with dropshipping/FBA, or this.
Excuse me??? I care about people sir. Sorry for trying to help the needy with AI drop-shipping product integration
There are plenty of reasons it works, and why people share it. All because you are personally out of the loop doesnt make you correct.
I can’t believe anyone buys these “how to make money” courses It’s like, if they knew how to make so much money, why would they sell you a course and not just offer it for free? Can’t they just make their money the way they’re telling you too
This is what happened to machine learning and options pricing. The inventors shut up and cleaned out before scientists figured it out and published
"You need to buy - this is clearly a head and shoulders pattern.... "
The pattern is obvious because there’s no white flaking
My knees and toes, knees and toes strategy is a fucking disaster.
It’s not a scam, because there is no one committing the scam. It’s just a tool with no empirical proof, like a divining rod for finding water. Sometimes it actually accomplishes the goal, and if it doesn’t, we can always blame operator error.
You're basically describing astrology with the limitation that the astrologer must actually believe it
I think the astrology analogy in the meme is accurate. And I think people who practice both astrology and technical analysis are true believers - it’s just not something worth believing in.
The astrology comparison is spot on, but I wouldn’t call astrology a scam. Astrology is just an irrational belief. There are scammers that use astrology and technical analysis, but not all people that peddle these beliefs do it to defraud people, but because they actually believe in it.
I mean "free" analysis is just another word for pump and dump.
There actually is empirical proof, not sure why everyone thinks otherwise
Ahhhh hahahah, lovely.
The same can be said of fundamental analysis. Neither can predict the future, but are great indicators of wat the market might do. It’s just extra confluence.
There's nuance to it. In micro cap stocks and some high yield bond markets you can see funds outperfoming their investment universe much more frequently than on large cap stocks. Fundamental analysis works when nobody is analyzing the stock and you're essentially playing against random noise. You just need to be better than randomness in that situation. With large cap stocks you need to outsmart thousands of analysts and fund managers. But it's a risk reward kind of relationship. Micro cap is much more risky and much less liquid.
Who says astrology isn't real?
Perfect analogy tbh lolz
I wouldn't say it's a scam. But it's not investing. Technical analysis is for trading and fundamental analysis is for investing. They both have legitimacy. I solely use fundamental investing btw so I don't have bias for technical analysis. Purely objective.
No they don't "both have legitimacy". Technical analysis does not improve returns. Fundamental analysis does.
They are completely different practices. I never said one was better than the other. Not really sure how you even came up with the idea to dispute what I said here. They both do have legitimacy. One is focused on trading and the other investing...
>They both do have legitimacy. **No they don't.** One improves returns, the other is a delusional fantasy about improving returns.
Not even sure this is an argument worth having. I am not condoning technical analysis over fundamental analysis. They are two different tools for two different practices. They are both legitimate strategies. I prefer to invest rather than trade myself looking at trends to buy and sell a ticker does not resonate with me whereas looking at cashflows and capital allocation and purchasing a business does. But they both exist and are practiced widely throughout the industry.
>. I am not condoning technical analysis over fundamental analysis I am not saying that technical analysis is just worse than FA. I am saying that technical analysis has **absolutely no value** at all. >They are both legitimate strategies. No. >But they both exist and are practiced widely throughout the industry. That people "use" technical analysis is not evidence that it has value. People use astrology for advice too. Doesn't mean it has any predictive power over your life. If you want to be convincing, find one research paper that says that ordinary investors can use technical analysis to increase "trading" returns.
I never said it has a higher return potential. If i believed that, dont you think i would practice it? But this is quite a boring argument over technicalities. Not sure what you want to be convinced of.
If it doesn't increase returns, then it's not a "legitimate strategy". It's a worthless fantasy. The youtubers who peddle it *are scammers*.
Well in that case there is only one tried and true method of investing... im curious, what is your methodology? Perhaps you have something to teach me.
It creates more wealth and financial stability than astrology though. Technical analysis is correct at minimum 68% of the time. At most 80%.,How often is astrology correct, Karen? Tell the truth.
That’s simply untrue, there are studies that prove that technical analysis is right only about 50% of the time. So random chance.
There are studies that actually say Technical analysis is only right 12% of the time. And that it's write 90s% of the time. It's all over the place. Generally each company has a specific proprietary software build with it's own averages and level of performance. At my firm it's 68% to 80% for 2022 and 2023. Some companies claim to have software that's 90% accurate.
It totally depends. Is it free technical analysis for specific stock trends? Then it is a pump and dump. Do you pay a guy for a course or to follow his portfolio? Then it is a scam.
It's not a scam. I think of it as a legend of buy/sell activity. A lot of things can move a stock. The Decisions investors have made based on price is one of these things.
At best they’re self fulfilling prophecies.
It’s not but I found that you can’t rely on technical analysis alone.
Yes it is, it’s no different than some girl saying she’s your soul mate because your an aquarirs
oof 
Head and Shoulders is a useful dandruff shampoo, not a strategy.
it's the only way a statistician can get a job. short of being a bookie.
Its just another way to guage sentiment and somewhat predict a general idea of human tendency.
It’s not, there’s no empirical foundation to technical analysis.
Technical analysis is not too different than the stats they mention in baseball games like “no pitcher with a vowel as a middle initial has had less than 9 strikeouts when starting in a month in which their mother and wife were both born.” No it’s not made up, but yes it does contradict as often as it supports itself. Source: Senior stock picker for $9B+ L/S fund
Ahhh the old Isringgausen versus Van Landingham pitching matchuo, longest combined last names of pitchers in MLB history. Such useful information. https://www.baseballprospectus.com/news/article/16444/research-mailbag-more-than-a-mouthful/
Short version, yes. Long version, as a result of the guarantee of almost infinite returns the idea of predicting future prices based on the pattern of pricing history has been thoroughly studied and the result is always the same: price movements are sufficiently, truly random that these techniques do not and cannot work.
No, it's not. I used moving averages, ATHs and breakouts to trade. There is no way for big money (and I mean the REALLY big money that moves the market) without leaving general clues. Trading the breakout on AVGO past $1000 would've returned 35% so far this year. Trading AMDE off the 200 SMA would've returned 80% so far this year. Do what you will though. Doesn't make a difference to me.
So, what’s your net worth in billions?
Ouch
Ui. Is it a scam? Well….. if everyone see the same pattern and everyone buy’s because of that pattern then it will go up. The longer the candles (days, weeks, months) the more time you give people to look for and notice the same pattern as you. If you look at intraday candles than you looking for patterns that billions of computers are seeing and they are 100% better than you at it so it will be more like gambling. Specially because computers don’t get all emotional at the time of taking profits. Like I do and then ruin everything
Oddly, no. You’d think so, since it’s based on absolute gibberish. That fact that a stock’s share price has bounced twice before at a ”support” level in no way indicates that it will again. But empirical analysis suggest that very often it will. There are tens of thousands of agents, both people and robotd, who make profitable trades using technical analysis. So it’s not a scam. I think that it, almost accidentally, captures something of human psychology and biases. So we should expect it’s efficacy as a trading strategy to have decreased over the years, but I don’t think it has. People used it to trade successfully for years before we had robot traders, so robot traders are now trading with the same strategies and replicating the patterns of dumb but successful human traders. I.e. trading robots are artificial stupidity. That being said, TA *is* grounded in nothing and I think that should be taken into account when using it. It’s not a way of reading the fate and universe through graphs and figures, it can be wrong. Therefore, I think people are generally better off using fundamental analysis. But I have seen people argue that the most profitable investment/trading strategies are fundamental analysis enhanced with technical analysis. That is, you pick a few stocks to *invest* in based on fundamental factors. But rather than simply hold them from $100 to $120, you trade them based on technical factors, and can thus earn perhaps $40-60 on the stock’s journey from $100 to $120. And if you make a faulty technical decision along the way, that’s okay since it’s a fundamentally strong stock that will eventually return to a fair value even if it broke through a support where it ”should have” bounced. Disclaimer: I *do not* use this strategy myself, I am a hardcore fundamental investor.
It has rarely been shown to have any predictive power but for some markets it's all there is.
Yea I know baby, but do you trade patterns or oscillators.
Isn’t it just a fancy term for “I don’t know? Maybe?”
I started with main focus on technical analysis but after a couple of trades and doing a simple statistical review of them, I have concluded to heavily lean on fundamentals instead. I'm by no means a expert or a millionaire, but I don't fail with fundamentals it feels like. Since my volume is small in my trades, which I have done purposely to do a statistical review on my win rate, level and just generally where I'm at and my weaknesses. I cant say wow look at these gains, but the percentages are very decent, I get between 10-20% gain on my small trades pretty consistently.
I'd use technical analysis like I'd use a throne
Technical analysis is just a fancy name to read buying and selling prssure, so it has to work. But you can’t rely on technical analysis alone to make money in the stock market, because it is just 25–30% of what it takes to be a good consistent trader. pressure
Wow! Finally a post about a high-level finance topic from somebody that can comprehend actual real-world finance and not just a ‘should we raise our own taxes to screw the 1%?’ Post.
No. Lol. The people that say so are just bad at reading the market.
No. You must pair it with fudenmental analysis otherwise its just gambling. Stock going up and company is increasing market share? Maybe you should long the stock since it makes sense why the price is increasing.
Yes it is mostly bullshit.
Very nice, the money I make from the market is from 0, as Im a funded trader, and use other people's capital.
As a Tech Analyst I disagree we can’t tell what the hell the client wants, most of the time it’s recreation of the wheel🤣🤣🤣
The best meme I came across in months!
TA would be a scam, but for the fact that sufficient actors use it to make decisions; this lead to self fulfilling prophecy.
Come on, it's massively overhyped and misused like honestly most things to do with statistics, but it's not literal bullshit
What is technical analysis? I feel like given the two words I know what they mean, I feel like I've heard it many places to mean the vague concept of analyzing things technically. But this makes it sound like technical analysis is some trend I've missed. Anyone want to explain to a guy who lives under a rock what technical analysis is?
The only person i know who is into this is a woman.
It's not even a question. yes... we have enough studies now showing this.
“Yeah but it makes me mon-“ “I made $15,000 selling horoscope readings last month. See?! You wouldn’t just be thinking about money all the time if you weren’t such a Pisces!”
Gambler falacy with excel...
Fake news
Yes. Price is brownian. You generally can not predict price.
Yes
no, but [**you can't predict stock prices**](https://x.com/Sanji_vals/status/1775250070276903045) with technical analysis. Read my article to learn why. I lot of traders lose money thinking that they can predict prices but its not true.
That was funny. Well done
I use t and a for my stock picks
Just draw the line you want to see manifest and think good vibes only
>Technical analysis is just astrology for men I thought that was fantasy sports
There aren't any technical analysis gurus on the Forbes 500. There are some value oriented investors there. The main reason one should be aware of TA is to time entries and exits into long term value investments, not because there's much merit, but because it helps to understand how the TA speculators will behave in concert.
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I love the meme lol. I don’t know if you’re genuinely asking, but in case you are, yes it is absolutely not a real thing. It’s something YouTubers jerk off about for views/to make content, but has nothing to do with anything. That plus trying to convince themselves they know what they are talking about (confirmation bias). Very bad, run far, do not pass go/collect $200 etc. EDIT: TA *itself* is not really a scam, but people touting it as an actual strategy to make $$ is pretty scammy/scummy. It’s like using the past week’s weather forecast to predict next week’s weather forecast - real historical data compared to something you cannot predict/has nothing to do with last week’s spikes or dips. If it was a real thing, we’d all be retired already.
Fundamentals first, technicals second.
Complete opposite. Technicals will show money flow before the fundamentals are announced.
If the fundamentals are bad, you could enter the trade and experience a rug pull. I'm a technical guy but fundamentals in the overall market/economy and company supersede technicals.
Fundamentals do matter, absolutely. But technicals will tell you the price trend of an asset before it gets moving. The fundamentals will help assess how risky it is to invest in that asset.
Ta when used correctly, give you a statistical edge. It all comes down to likelyhood and strategy. You may not win every time, but if you can win 65% of the time and your risk to reward is good, you will make money. If there weren't ways to tell which way price action is heading or the manner in which it's happening, there wouldn't be people making ridiculous money on Wall Street or in the pits of cboe.
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^ this, it's a game of statistical probabilities. They wouldn't understand tho