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A free, complete guide to Technical Analysis

zerodha.com

21–30 of 52 posts

Re: A free, complete guide to Technical Analysis

#21

Earlier quoted context omitted.

Stat arb is not what is commonly known as technical analysis. They are distinct. No. Technical analysis is forecasting prices based on past data. Stat arb is a particular form of technical analysis, based mainly on looking for mean reversion in sets of securities. Strictly speaking, statarb \subset technical analysis.

> forecasting prices based on past data By your definition everything is technical analysis. Which makes your definition useless.

Hardly - fundamental analysis exists.

Any strategy lies somewhere on the continuum of strategies ranging from purely technical (looking at past prices only) to purely fundamental (looking at fundamental data only).

Re: A free, complete guide to Technical Analysis

#22
The guide opens with an analogy suggesting that picking the best stocks to invest in is equivalent to picking the best restaurant to eat at, and that technical analysis is equivalent to looking for the stall with the most people at it.

If technical analysis is equivalent to looking for the restaurant with the most people at it, then the restaurant that you're trying to find is the one that, over the period that you intend to eat there, will gain the most new customers, relative to the number of customers it had when you walked in, not the one that's best to eat at.

The flawed analogy exactly explains the problem with technical analysis.

Re: A free, complete guide to Technical Analysis

#23
Technical analysis is far from useless. As an active trader, it's the best tool I have come across. I'm sorry, but to say that it is useless is to admit pure ignorance, or to admit your failure to grasp the concepts and understand how to apply them visually and correctly.

People do apply techniques incorrectly, yes. They can get confirmation bias from it, yes. However, that does not invalidate successful traders who trade primarily on technicals. Keep in mind that a "tool" is just that - but not used the same way by everyone - and "this means that" isn't a blanket rule that always works as described. Everything is part of a larger structural puzzle. Also, HFT algos will eat your lunch if your hold period is too short. I don't hold a position for more than a week, MAYBE two, but never less than 45 minutes - and as a retail trader, that makes a huge difference in P/L ratios over time.

Through my trading experience I have continuously used less fundamentals and more wonky technical techniques I have come up with. It has given me a massive edge over whoever is on the other side of the trade, and has pulled me quite a long way out of debt and into making a nice living doing it on the side. The side of the story that you don't see in the endless "get rich quick" trading schemes that promise to teach you all of those super awesome secrets is that anyone who knows what they're doing isn't spending any time teaching it to the masses.

But, to get back on topic: Well done with this site! It's a great beginner guide to understand what a lot of the basics actually mean. Babypips falls very short.

Re: A free, complete guide to Technical Analysis

#25

Technical analysis is far from useless. As an active trader, it's the best tool I have come across. I'm sorry, but to say that it is useless is to admit pure ignorance, or to admit your failure to grasp the concepts and understand how to apply them visually and correctly. People do apply techniques incorrectly, yes. They can get confirmation bias from it, yes. However, that does not invalidate successful traders who…

But what is the empirical basis to things like Fibbonacci retracement levels ?

Re: A free, complete guide to Technical Analysis

#26

Technical analysis is far from useless. As an active trader, it's the best tool I have come across. I'm sorry, but to say that it is useless is to admit pure ignorance, or to admit your failure to grasp the concepts and understand how to apply them visually and correctly. People do apply techniques incorrectly, yes. They can get confirmation bias from it, yes. However, that does not invalidate successful traders who…

But what is the empirical basis to things like Fibbonacci retracement levels ?

They are self fulfilling to an extent - because all the TA day traders are using the same signals

Re: A free, complete guide to Technical Analysis

#30

Earlier quoted context omitted.

But what is the empirical basis to things like Fibbonacci retracement levels ?

They are self fulfilling to an extent - because all the TA day traders are using the same signals

Sadly I have to agree with this.
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