[snip]
The reason for this is to make traders understand what we are up against so we can heed to every necessary trading rules which will keep us lasting in the trading game.
Well, on my own. You can't rely only upon technical analysis, that is right, the market is extremely difficult to predict and creating speculation through TA is not commonly give an exact result
[ perhaps it is near ], how could you believe if this does not even give an accurate result. However, thank you for trying us to explain your technical analysis, --but, indeed, I believed if you will show your proof of this not only for discussion.
Do you think we really move the market? We are like a remora fish on a shark just going along with whatever they do.
The fact that their actions leave patterns behind in the market is what gives us an edge to trade with.
Technical analysis gives you an idea of what the market is doing; and if you trade price action, all you study is what price is doing (indirectly, the actions of the dynamic traders).
The dynamic traders know the way you see the market.
They know you are drawing a support or resistance zone wherever you are drawing it.
They know the way retail traders think and the way we go about Technical Analysis.
All they simply do is manipulate the market in their favour to get the price where they want (cheaper for them) at the expense of our stop losses.
That is the reality in regards to TA. It is to believe that those passive traders don't rely upon TA's but having in the actual scenario and adapt to it will it exactly could help them. Traders should become vulnerable to that kind of change and we can't expect that TA's will work great all the time as we know how volatile we are.
Whales probably don't have that kind of analysis, instead, they go along with the market and use their manipulating power to change the trend. Besides, most traders are relying on their actions and predicting what they'll do next rather than to keep TA's.
This is why what matters in trading is sticking to a winning strategy and following a trading plan (You follow a trading plan because a winning strategy is never 100% accurate)
Even when you do the technical analysis, you still can't guarantee a sure win for every trades. That's why there is a stop-loss if incase your analysis goes wrong, the cutting loss is very important in trading, it's one of the best weapons in trading because of NO 100% TRADE every time.
I'd rather use technical analysis than fundamental analysis, that's why if you want to become a trader you should really learn and love technical analysis.
I agree with this. I'm also a purely technical trader.
These are nice explanations and I think very helpful for many users.
Some are against and some pro technical analysis but it's needed to point out that is just another tool that might be helpful but just because of it you will not become more successful trader. In fact, there is no tool that will tell you what, how and when to do something in trading and get profit.
However, all these tools including technical analysis might be useful if you know how to read the data and how to use them. But there is no plug and play solution that will made you successful trader.
Exactly!
Truth be told, there is no Holy grail in trading.
The only thing I refer to as MY holy grail is
Risk Management.
Your explanations are not having enough weightage to change my perception on technical analysis because I am already viewing the market in more or less same way you have explained, lol
. I mean your theory might be a surprise for the people who never experienced all the pain of markets but definitely not the people who are into trading for years
. I just regret that I'm not getting this kind of explanation some 10 years back itself so that I would have approached trading definitely in more effective way than I started doing that after lots of struggle.
Technical analysis is one way to predict what is going to possibly happen and definitely not a mathematical calculation that will foretell what is going to happen exactly in upcoming hours/days.
Dynamic traders are everywhere but group of passive traders may overcome the decision of dynamic traders on some occasions; I mean dynamic traders will be losing power when more number of passive traders will be taking same decision. Manipulations are everywhere but when more volume is happening those manipulators will lose their power. Simply following a technical analysis will help because more other traders also will be following it to take their trading decisions.
This is a very nice contribution.
More the reason why it is advised to trade with the trend.
This basically clarifies how TA's aren't gods, they aren't time travellers that came back in time to show the future of the market prices. They aren't all knowing and therefore, should not be the basis of your judgement when trading
. Even if we do say that a TA's judgement is based on analysis of the trends and facts, it still remains as fact that a TA's judgement is just purely prediction.
In the end, the chances of you hitting it off with a trade is 50/50 for all chances. Win or lose, no TA could lessen that. Even if you say that someone was going to make a big move, it remains that the big move does not guarantee a more than 50% chance of it successfuly moving the market as you predicted.
If you say it's 50/50, then i will refer to trading as gambling.
I don't see it as 50/50; i see one side having a higher probability than the other. more the reason why we have confluence.
The trouble is hidden at the end of the line, check out the "all you need to do is to trade with an edge/strategy that works and follow a trading plan", well if there was any edge or strategy that would work forever everyone would have followed it.
That is what bothers me the most, some people think that there is a method or a strategy that you can use to make a profit and they are missing the fact that there is 8 billion people in the world give or take (said 7 but I believe it is closer to 8 nowadays) and over half of them are poor, don't you think if there was an edge or a strategy that would allow you to make a profit, those people wouldn't realize this and EVERYONE would use it? So by all conclusion, no strategy can work too long, it works for a while but then too many people use it and break it so you gotta find a new one.
Actually, on the contrary, i am of the idea that individual should stick to a strategy.
Obviously we trade in a changing market condition; this is more the reason why traders should have a strategy for different market environment.
I trade based off Discretion.
Great explanation OP, but how does it relate to cryptocurrencies. We're talking about a market that is overwhelmed by the number of bots and wash trading. My opinion is that TA in cryptocurrencies is very limited and works out well in identifying bull amd bear markets but not in short-term moves.
Using your language we're in need of those dynamic traders. Bitcoin trading in a 9000 channel looks like it has no real depth just bots buying and selling the same coins over and over.
This is related to cryptocurrencies.
Price is always manipulated to lure traders into pushing price to a level where whales can get them cheaper.
