"For something to cross into technical analysis, you need to believe that repeatable patterns observed in past price movements have forward predictive ability at a level sufficient to overcome retail fees and spread.
The real stupidity of technical analysis, and why it's a cancer for the retail trader, comes out of a few things:
- The edge must necessarily be tiny or big trading houses, machine learning and HFT would be making hundreds of billions of dollars leveraging large sums of capital, since technical analysis is full-information algorithmic (as you say, all of it just price and volume), and machines crush the human mind at analyzing purely mathematical full information games. If you're some retail clown making a non-trivial sum leveraging say $50K in capital, why aren't armies of physics PhDs (far far smarter than you with superior tools and computing clusters) paid $500K + bonuses chasing the same sum on billions in capital, and reducing your edge to one where there are no longer large returns?
- It encourages overtrading, which is the real scourge of the retail trader given the fees and spread they pay. Large data sets from brokers strongly show that amount of trading is very strongly correlated with increasingly negative return.
- There ARE large edges in the market using qualitative assessment of news and the probability of future occurrences, far larger than technical analysis could ever give you. Technical analysis fills your head up with a huge amount of crap and stops you from doing the hard work of finding real alpha.
- Technical analysis encourages confirmation bias and irrational thinking and data snooping, and makes you a poorer thinker."
"- The fact that its participants are very, very stupid people. I gave an example of how you could strongly boost TA signals by just correcting for market inflections which drive most stock inflections (which create copious false support/resistance signals) - yet no one does even this basic noise correction. When a method fails to use even the most basic noise correction, its participants are assclowns.
- The extensive literature that shows the upper bound on the information/edge given by support and resistance is tiny, probably below retail fees and spread, in direct contrast to what idiots like you believe. Support and resistance is the cornerstone of TA and is relied upon for major decisions in TA systems to a high degree, yet it has a minuscule edge at best.
- The fact that TA patterns are created as prominently and frequently in graphs of RANDOM WALKS as they appear in real stock charts.
- The fact that people are easily fooled by noise and swear to seeing patterns in it.
It's an idiot's paradise. It's a waste of time for anyone wanting to generate real alpha."
Nicholas Miller
No one cares about your faggot opinion. You faggot.
Isaac Diaz
>be (You) >watch a few "oh boi! I am a TA expert now! Now I can go load a 100x long on BitMEX!" >goes all in >market dumps afterwards >liquidated >goes on Burmese Puppet Theater forum >makes this post on why TA is worthless and doesn't work despite the existence of individuals here who can 10x their BTC stacks simply analyzing Moving Averages, RSI, and volumes
>It encourages overtrading, which is the real scourge of the retail trader given the fees and spread they pay. Large data sets from brokers strongly show that amount of trading is very strongly correlated with increasingly negative return.
This x 1000. This is how people screw themselves thinking they are some kind of power day trader. Every trade costs money and that's not even to mention taxes.
Mason Young
TA works on a basic level. Price action, volume, and common MA's can all be used to make better than random choices. But anything more complex than that is complete bullshit, and it can all go out the window with one big order in manipulated markets.
Jack Watson
algos have bigger fish for fry than retail traders using basic TA atm
Charles Phillips
>despite the existence of individuals here who can 10x their BTC stacks simply analyzing Moving Averages, RSI, and volumes
>what is survivorship bias? >what is, buying lottery tickets is a great plan, b/c I saw a guy on the news who kept buying them even though everyone doubted him and now he drives a brand new cadillac
Noah Jackson
from what I've observed, volume analysis is the most reliable form of TA. Such a shame it's not always easy to understand
Gabriel Watson
meant this nah fren, one of them who has actually 10xed his BTC is me, although it happened over the span of 2 months, and I was quite lucky one time when I used 50x as I was VERY sure it would dump on 10th. But also because unlike 90% of Jow Forumstards I set stoplosses. Still not very good at getting entries that doesn't trigger my stoplosses later on, but starting to get there
Juan Sanchez
>nah fren, one of them who has actually 10xed his BTC is me, although it happened over the span of 2 months, and I was quite lucky one time when I used 50x as I was VERY sure it would dump on 10th. But also because unlike 90% of Jow Forumstards I set stoplosses. Still not very good at getting entries that doesn't trigger my stoplosses later on, but starting to get there
Good on you, and I wish you (and everyone) great success, fren. srs. I'm just concerned that lots of newbies jump on TA bandwagon, overtrade like OP said, and then lose their shirts.
Seems like, at the minimum, people trying to read the market like this should start out playing with a small part of their stack.
Isaac Miller
I usually trade no more than 2-3 times a week. Sometimes my entries are so shit that it lasts for days on a sideways market, thus the 8hr fees leech from my holdings Like right now, I've had a short going on since 6pm yesterday. It's 10:30pm here now
Jayden Mitchell
It's similar to gambling. It's very much possible to make a living playing poker. However most people who try fail because they're incompetent, impatient, and don't respect the high learning curve.
Henry Cook
Roulette, not poker. Most people who try fail because it's -EV. Just like TA. There is unironically no evidence whatsoever that TA actually gives an edge.
Michael Ross
That's provably false. Consider all the trading bots that profit simply by crunching numbers and spitting out a 1 or a 0.
Alexander Gutierrez
Literally doing basic shit like your own observations of moving averages will show you The Market isn't random.
The 200 day SMA is fucking battleground, son. Either join in and trade these markets. Or, play it '''safe''' and take a Punt on Interest Rates and Monthly Time Frame Trends by buying and holding Index Funds.
Again, without a statistically significant study, that is not proof. Also let's not confuse quant trading with TA.
>countless TA morons trade using a variety of bullshit -EV strategies, thus ensuring that some lucky subset of them will profit from sheer luck no matter what happens >a lucky subset is profitable over a finite timeframe >OMG guys TA totally works!
William Turner
This is true, however, successful bot strategies are then replicated, proving to a certain degree that TA does work via the reinforcement of survivorship bias. Then there are counter strategies designed around those, and so on.
What this means is that while TA is bullshit, survivorship bias allows successful strategies to survive and propagate and continue a cult existence regardless of whether they were ever a real thing in the first place. Schrodinger’s strategy.
Does this even make any fucking sense?
Ryan Morris
>muh studies If anyone ever published a mathematical proof for a working trade strategy it would instantly stop working. That's generally what happens with working strategies over time as bots evolve. In order to profit your strategy has to constantly be adapting to the changing market conditions.
Thomas Lopez
>The fact that TA patterns are created as prominently and frequently in graphs of RANDOM WALKS as they appear in real stock charts.
Source for that? I'm actually curious baby.
Ian Diaz
your ID literally has jew in it. (((They))) don't want you to learn TA
Daniel Jackson
If that were true we wouldn't see the same distinct patterns emerging over and over again. The meme bubble chart for example. Also fractals wouldn't be a thing.
Benjamin Bennett
you wanna hear trading in a nutshell?
the trade's outcome is binary: either up or down, so the expected value of a lot of these processes (say 1000 trades) should be 0.5. but in reality it is not, markets can have wild swings and while overall your choice is correct your stop loss could be hit on the way or something else happens, like slippage, or you can pussy out and close your trade earlier, or holding it too long. people use ta, indicators, crystal balls, moon cycles whatever to shift probability rate at least by a small amount (best traders have 60-40 win rate, only a few have 70-30). that said, it doesn't save you from mean reversion: just as a coin flipped 20 times can result in 20 tails, a trader can lose a lot of positions one by one. even the best traders suffered this fate - richard dennis, your loved ralph elliot, jesse livermore (commited suicide). so yeah. go and make money big boy
Tyler Murphy
Quantitative Finance has it's place in The Market, particularly when comes to things like calculating Hedge Ratios, Portfolio Construction/Optimization, and Derivative Pricing.
But when it comes to Directional Speculation, don't confuse Complexity for increased effectiveness.
There are Order Book traders out there who literally just use basic chart levels, and focus purely on tempo/momentum of the Book.
There are forex traders who literally focus on Naked Trading, and have absolute disdain for anyone who uses any sort of lagging indicator.
An approach can be simple, but don't confuse that for people thinking it's "easy to make money with". Money is never easy to make.
I use the 200 SMA on multiple Time Frames, and apparently the Dow futures traders have come with idea long before I came along. Seems simple, right? Try trading with it, and you'll realize it's not, but what it allows me to do is: put Price into Context, manage my Positions, and be in for big moves.
I don't believe a strategy needs to be a secret for it work. And the thing with the 200 SMA is that it doesn't actually completely rely on self-fulfillment to "work". Even if nobody "used" it, it'd still tell me useful information about what Price is doing. What I like about moving averages is that they're Objective.
>that said, it doesn't save you from mean reversion
You're absolutely right. I finished this week down about 4%. Now that's far, FAR, better than my performance in February's crash, and the Tariff situation which followed. But I still suck at trading violent Pullbacks. And what's most disappointing is that it was mainly due to my lack of Discipline for cutting losses early.
In all likelihood, there's going to be further attempts to press below the 200 day SMA when the market opens, next week, to go hunting for some Stops. I still have Long positions open. Earnings season might save me, but who knows what Guidance is gonna look like on a lot of these companies with Rate Hikes start to be accounted for.
A real Bear market is something I've yet to experience.
Bentley Rodriguez
good luck, I didn't go through with it. after sometime in the field I found out that trading is not what everybody thinks it is - everybody thinks of it as playing basketball but in reality it's just hardass math, probability, statistics and a bit of luck. no one's gonna tell you that because it's a multimillion online marketing industry where certain individuals will always their useless indicators and holy grail systems
Jaxson Jenkins
ok not s***ll but try to sell. jeez it's been added to the spam list
Luis Phillips
you realise all of science is literally drawing lines on graphs and calling it causality because repetition
Nathan Diaz
Those bags must be heavy.
Zachary Mitchell
Yeah I think long term trades with monthly candles are the best, they're easy to spot and relatively safe, just use exponential moving averages on less volatile markets, stocks etc...
Michael Johnson
I honestly don't believe The Market to be mathematical, in terms of directional movement, in anyway, unless it was self-fulfillment.
The Market is based off of Limit Orders and the interactions that take place in the Auction process of the Order Book. What HFT tends to do is to be focused on earning the Spread through Market Making, earning Rebates by providing Liquidity, or by tactics which involve strategic use of special order types: youtube.com/watch?v=ItfAKguEdAE (video by Haim Bodek explaining shit to do with Reg NMS and Order Types if you're interested).
I don't believe they're actually doing much which "Mathematical", in the Quant sense. They're taking advantage of opportunities and being really quick to do so.
Imo, I believe TA, particularly moving averages plays a huge role is determining how markets actually move. Ignoring them is stupid (if you're a price-based directional trader). The 5, 10, 20, 50, 100, and 200 SMAs, as well as the VWAP pretty much dictates market movement. Now, of course it's not easy to trade those things, otherwise I'd be a fucking billionaire, but from my screen time, I've come to believe that Moving Averages are objectively how markets move by.
Jack Davis
Y'all gonna take advice from someone whos id on this board starts with "jew"?
Levi Sullivan
moving averages cannot dictate price movements simply because they show what direction the price was headed in the past, now of course if the trend is getting stronger the moving averages will reflect it - but later, when the opportunity will be long gone. you don't need anything more than a single 200 sma really
Nathaniel Collins
I'm not bragging or claiming to be an expert, but I actually maintain pretty big Trading journals, in addition to my screen time, I know what I'm talking about.
When Price Trends, extremely strongly, the 5 SMA is used.
TA is just a modern way of making up religion as you in the fucking caveman times.
>ooh we got a good hunting season, must be because we sacrificed a virgin a couple of months ago, better not anger the gods and sacrifice another come next year
Juan Miller
sure if it works for you for the time being it's good, but try to learn to see things without them. worst thing you can do is to learn to depend on lagging indicators. and I hope you turned off volume just for the picture and you're using it?
Alexander Nelson
I do at times use it, but honestly, it just adds conviction to a Price-based entry, it doesn't dictate to me what to do, initially.
Noah Hernandez
>Renaissance Technologies
Jack Fisher
no one that understands ta will say that it doesn't work. only lazy copefags spam "ta is a meme"
Elijah Martin
Well this is pretty retarded. You can see that it drops below several times and its better to just hold.
(1/2) let me tell you a personal story. It might help you or you might just blow it off because you do come off as really narcissistic. When I first got into crypto in 2015 I was Obsessed with the idea of day trading. And I was good at it too. Worked a shitty job pulling just slightly over minimum wage and was able to save $800 and put it into crypto, mind you bitcoin was around $400 at this time. I took time out of my day to constantly learn about day trading and over the course of a couple months I became a solid trader. I was able to turn my original $800 investment into $9,000 dollars by trading pump and dump shitcoins like digibyte and trumpcoin, and I was able to properly time the market. I'll never forget looking in my btc wallet and seeing 10.2 btc. Thought I was a trading god, that I was on my way to making it and no one in the world could tell me different. Back then Poloniex had this chat box called "trollbox" that you could type to other traders on and I was probably bragging about my gains or something when an older gentlemen started talking to me in the trollbox telling me something along the lines of "congratulations on your luck, but you seem young and you should look more into investing your money instead of trying to trade constantly. Put that money into Ethereum and just hold it there for a couple years." I thought how dare this man tell me I'm lucky? This man knows nothing, I know all there is too know about this market. It was early 2016 at this point and Ethereum was already #2 marketcap and the price was around $11. It sounds obvious now but at the time the whole market was bearish for years and I was making decent money shorting Ethereum, it was dealing with the DAO hack and Ethereum classic popped up around this time and I threw 2 grand at it and cashed out with a $800 profit 3 days later.
Ayden Morales
(2/2) I scoffed at this man. Hold Ethereum? How laughable is that? the chart was consolidating from $25 all the way down to $11, any trader with a decent understanding could easily see how bad of a choice this was. Plus Ethereum is expensive. $11 for a fucking coin? I'm not going to see much gains from a #2 marketcap coin so I'd rather chase my pumps on lowcap shitcoins. I scoffed at him and wrote back in the trollbox saying something along the lines of "Look at the RSI, Volume is so low and has been consolidating for months. I'll pass." And I sat there so smug and so stupid. He told me ,"technical trading will only get you so far. Remember that." I laughed at this stupid old man and thought how foolish he was. I was making gains and this retard has just been losing money for months, why in the fuck would I ever listen to him? But boy was he fucking right. I never bothered to learn about the market past technical trading and really couldn't give two fucks about market sentiment/fundamentals. When the bull run hit, I refused to trade any other way. Believed I knew all there was to already know. I was longing/shorting the market like crazy and was losing money here and there, but also gaining some money here and there. But if I had decided to just buy and hold into any of the top projects (BTC, XMR, XRP, DASH) I would have made an enormously more amount of money. I wasted all my time day trading at the start of the bull run and during the middle of it, was constantly attempting to time the start of the bear and constantly failing. All my progress I built up over the past year was wiped away in a couple weeks. My method of trading was not sustainable over a long period of time and I learned that lesson the hard way.
So I'm going to pass on the same advice I was given three years ago:
Technical trading will only get you so far. Remember that.
