Why Technical Analysis Is A Waste Of Time

chekohler (70)in #money • 6 years ago

Hey Jessay Traders

If there's one thing that really grinds my gears its technical analysis content, it's all over YouTube in both crypto, forex and stocks content, channels dedicated to shitting out garbage that means nothing, crafting some sort of narrative for views because they're TA doesn't mean anything and its the only way they can actually extract value out of it.

Think about it, if their TA of a market was so on point, why would they be sharing it with you for free? If they're so confident in their trades why don't they allow you to copy trade and show their returns?

If their TA is so good why wouldn't they be keeping this magic formula to themselves? Most likely because it's not, it's all to look and sound smart throwing around a bunch of jargon thinking they actually know anything.

Image source: - @lpfaust

Day traders and speculators

I'm not saying being a day trader isn't something you can earn money doing but its something you need a sizable amount of capital to get into to cover any losses. You need reasonable capital to set position sizes to earn off that you can extract profit for living expenses and you need capital for your longs that you're going to sit on for some time.

This isn't a poor man's game and this is my issue, they're selling this golden ticket like anyone with a $100 and a dream is going to get wildly rich when its a lie.

The reason they don't provide the context is that they want to either get views for YouTube income or get you to sign up for some course and suck out capital that way instead of making money from the actual skill they claim to have read the market.

Image source: - quantlabs.net

Charts mean what you want it to mean

We all know by now that the stock market is fraudulent and the amount of currency pegging in big markets makes forex anyone guess. All I can say is both these markets are artificially influenced all the time, and that's why traders make their money they know there are going to be put options on certain stocks and just like crypto you buy the rumour and sell the news. However, unlike crypto, there is a floor you can rely on.

This is why its a brave or delusional person to be doing TA and making calls on crypto and why I feel its borderline criminal to be selling your signals to consumers.

Trading confirmation bias

Humans love to be right, its a fact of life and the reason we stir up so many arguments. This is where the danger comes in as correlation is confused with causation, sometimes the most dangerous people are those who have made a few successful trades.

Confirmation bias kicks in along with the hot hand fallacy and they think they know how the game works, only to be suckered into making bigger and better bets and then lose it all.

There is a fine line between investing and gambling when it comes to day trading and its why I am personally not a fan or willing to put my capital into trading patterns like these.