RE: Why Technical Analysis in Trading is 100% Bullshit
complete bullshit article.
you are confusing front-running to technical analysis and are only referring to day traders whereas most technical analysis works for swing traders.
Chartism has to do with reading behavioral finance, the charts are tools to make decisions based on pure mass psychology.
In no way, shape or form does it work 100% of the time, it is only a tool to make an educated guess about where the market will go. It also allows you to put stops to limit your losses, and more importantly your psychological loss.
Price is the only true information that can be trusted in a market and TA is just that... analysing the price and its past to anticipate the future.
Big banks and hedge funds do indeed manipulate the market but not based on chartism, there is no way to code visual shapes from a chart, it is all based on statistical analysis, which is different (think: MACD, RSI, etc.).
I have been trading equities for years and learned TA from the best in Europe.. I am telling you it works, it is just an constant internal fight with your own ego and greed. TA helps you deal with it if you know how to use it.
How can you possibly use "mass psychology" @jurisnaturalist. Seriously. Can you predict how the masses react? Even if you predict how the masses react, how can you then predict how the rest of the traders will react?
I can argue that charts are not any better than coin tossing.
I specified that this only applies to crypto markets.
I don't buy it for a second that it works in the long run. Swing trading often requires some insider info. This is where you battle ethics with legality.
big difference between prediction vs. anticipation. It's a matter of probability, that's all... no one can predict.
I agree with you in a sense that DAY trading is kind of the same as coin tossing because of the reason you mentioned (esp. because of lighting-speed trading algorithm and given the fact that 80% of the trading today is done by these algorithm machine).
But back to swing trading and too illustrate the point. Let's take AAPL, please explain me why you think the support is tested 4 times at the same price... why is the downward trend line tested 3 times and then it broke upward including the 50-day moving average... a simple swing trader seeing that end of July could position itself by buying the SPX once the price reaches the moving average and put a stop 4/5 % lower in case it remains bearish. In the case of the graph, you would be in the money today. luck?
or another example, on SPX (SP5000 ETF). please explain me why you think the support is tested 4 times at the same price... then when it breached the resistance it went straight up?
This can be found in so many charts, and it is far from being just random luck.
But again TA is not for everyone, and we need people like you. You are the ones selling when we need to buy it and make profits.
luck. in other cases it doesn't so that. google post-hoc argument. in fact let me do it for you
https://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc
Because there is a psychological barrier that says that this specific stock or etf is NOT worth less that this exact price, so it bounces up. It's just the market dictating that to all.
All we are saying is that because A, B and C occured MAYBE D will occur as well... again.. its a probability of happening and is based on observations made, doesn't mean it is a rule of nature. And it is very different to state something that has occured in the past and deduce something from it than observing something and ANTICIPATING that it could likely occur again and so positioning onself in entering that trade while managing the risk (stop orders). It's that simple.
having a rough idea of what an asset may be worth is something that could come from a number of factors, but that has very little to do with actual technical analysis... technical analysis is silly, but may work in some cases solely due to how many other people also think it may work...