"Technical Analysis Doesn't Work" - Dalin's Response! ft High Altitude Investing
In this segment of my interview with Dalin from High Altitude Investing, we're gonna be addressing a common criticism you hear that goes along the lines of "Technical analysis doesn't work".
Here's what Dalin Anderson has to say about that.
DISCLAIMER: This is NOT financial advice. I am just offering my opinions. I am not responsible for any investment decisions that you choose to make.
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Technical analysis works for the same reason astrology works. Life is not random but follows patterns. Markets also have cycles. To some extent you have to be careful because the rules of TA can set up a self fulfilling prophesy when everybody is operating under a similar belief system.
In both cases, they have trouble accounting for "black swan" events. Well astrology tries to account for this using the planet Uranus, but if you can predict it, it's not really a black swan.
In the crypto space, any talk about fundamentals utterly useless at this stage because none of the projects are earning any real world value, yet. It's all at a stage where it's sentiment-based. I'm not shitting on technical analysis, not at all, but it seems to me that the entire industry is too easily moved by a few pieces of news of regulatory actions etc. like a paper pag on a windy street for TA to be very reliable.
For that reason, and tax reasons, buy and hold is totally superior to any kind of trading. Even if you were surfing the small or middle-sized waves succesfully, a big one brought about a single major hack, a key regulatory action etc. can destroy your profits. Just buy into projects that make sense and that involve reputable people, not empty vaporware, and forget for a few years.
I do get the reasons but does it apply to crypto? Bitcoin isn't a company nor is crypto. Maybe Technical analysis is good but many of them are fake? CNBC ones sucks so bad. Most of them failed... Maybe the crypto space is filled with mostly bad ones? I not a short term trader a hodler more so I look at fundamentals more than anything. If i believe in the coin the less a price drop hurts and the more I want to buy.
I know that technical analysis in trading work. Whether it’s Fibonacci, Eliot Wave, MACD, Bollinger Bands... you choose. Just don’t get over technical and if using technicals for short therm trading, you should definitely use stop loses. I personally tried most of them and the best strategy for me had been oversold and overbought indicators. But that was in the past, now I’m 100% long therm investor.
One of the technicals I’ve used are support and resistance. One of the best is when the breakout of resistance appears and then price pulls back to new support and starts to bounce. I hope it makes sense. Anyway, I do believe in technicals just like Dalin, but it’s mostly for traders who get in and soon get out and that’s not for me since I wouldn’t have time to watch the price all the time. On top of that, I just don’t have nerves for swing or short therm trading.
I have always thoughts there is use for TA and many that say that it does not work really do not know how to interpret however there are many perspectives to every chart so one need to be careful. I am a more fundamentals type investors but use TA to determine good entry points.
Technical analysis certainly has merit seeing as significant portion of trading is based on algorithms which are used to trade to specific levels and signals. With that being said, I believe technical analysis must be accompanied by macro analysis.
Excellent piece! A lot of the bad rep comes from not truly understanding what technical analysis actually is. A large amount of people get into it to then find it's much harder to learn than they anticipated and give up thinking it just doesn't work.
Nice video to share with a friend who doesn't believe in TA! 😄
@DUnite supports this content!
I should put more effort into TA!
Fantastic work with this one. Nice review and continue the nice work! Glad to peer you posting again. Thank you for the updates.