Why technical analysis is not reliable

[dansus021]

Technical analysis is not 100% accurate I mean there is no analysis that always hit 100% win rate without a single loss or else maybe people are using the technique all the time.

To be honest, TA is reliable when much of people know the technique ex. EMA 100 and 200 is well know moving average to determine long term trend and the price usually reject at that level for 70% all the time I believe because a lot of people believe in it. or simple TA like basic supply and demand zone or support and resistance zone is has 80% accurate in my opinion

[1714750003]

1714750003

[Bravut]

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.
 Some of its limitations includes
1.it is based on assumptions about past market trends, gotten from the past market price and  volume data
2.it is a backward tool subject to interpretation from different traders.
3.Technical analysis will not provide the full details of the market,  that is putting economic and global events into consideration,
so traders should put all these factors into consideration before making an investment decisions using technical analysis.

The financial market is unpredictable, for me the best approach is simply not relying on only TA but also having a Fundamental backings of what the market is saying atleat to give you an edge and a direction in the market. Every trader need to have confluence and ensure all are met before they risk on any trade.
We must know the Market  does not respect anyone, and as such we only participate in a game of probability but with an edge we are good to go. So you do what works for you as  all approach have limitations, you just have to refined it as it suites you. Some use indicators, Support and Resistance, ICT, Algo, SMC, OR, etc all this is geared to make profits off the market in essence we see it on the trader to build on this and simplify it to be profitable in the market.

Once a trader can can remove every limiting factor in his system nothing again can tie him down. Rinse, Repeat and Refine.

[Beparanf]

 Some of its limitations includes
1.it is based on assumptions about past market trends, gotten from the past market price and  volume data
2.it is a backward tool subject to interpretation from different traders.
3.Technical analysis will not provide the full details of the market,  that is putting economic and global events into consideration,

You forget that trading is all about predicting the future. History always repeats itself and this is true on trading. Those patterns and indicators is just keep repeating that’s many people use it as basis for trades because it’s proven working in the past.

If you hear about self fulfilling prophecy, this makes technical analysis valid because all traders is using it as basis with their trades. This creates a mass following to the signals given by technical analysis that’s you should use a technical analysis and patterns that is common and popular to guarantee that everyone is looking for it as reference with their trade.

[ThePro]

TA gives interest areas based on past data and order flow to execute based on real-time data. You just need to understand when Shorts go aggro on support and get trapped, take long and enjoy them getting squeezed. Vice versa for shorting.

[nara1892]

Technical analysis is not 100% accurate I mean there is no analysis that always hit 100% win rate without a single loss or else maybe people are using the technique all the time.

To be honest, TA is reliable when much of people know the technique ex. EMA 100 and 200 is well know moving average to determine long term trend and the price usually reject at that level for 70% all the time I believe because a lot of people believe in it. or simple TA like basic supply and demand zone or support and resistance zone is has 80% accurate in my opinion

Actually yes exactly as you said that however in the world of trading there is absolutely no strategy that can achieve 100% accuracy, it is impossible because after all this is a trade which always involves risk, simply put if for example there is a profit opportunity then there will always be a possibility of loss, it's always like that but maybe the difference is when you are really able to manage, control and run everything properly without doing something that is not recommended especially if for example you have experience and high enough flying hours then you will be able to make the chances of profit greater than the possibility of loss.

Technical or fundamental analysis is also the same in the end will never be able to provide 100% accuracy to really give a profit, the logic is that if for example it can make traders always end the session with a profit then obviously there must be a lot of successful traders, but the reality is not like that. As you explained above about TA and it is true that TA can only be relied on to find out the situation and market conditions that are happening, and usually I use TA only to determine whether the trend will be strong up or strong down or sideways so that when there is already knowing the situation then that's where I will make open positions, but still for the problem of possible losses can still occur.

[jaberwock]

My question to you is: is technical analysis not helpful to other traders? Now, if technical analysis is not reliable, shouldn't other traders stop using it? Is that right?

Let's just assume that technical analysis is not really reliable. What method should a trader use or do to get profit from trading on any exchange platform if we don't
do technical analysis anymore? Please answer OP so that we can be enlightened here on this forum platform.

The problem is that TA is not something that is definite, meaning that not everyone uses the same TA, if I check the bollinger band of a coin and buy based on that, and if you check the EMA of it and buy based on that, we could have two different ways and two different entry points, and yet we both did TA. Or better yet, I could be a newbie who made a mistake while calculating, and you could be a veteran who did it exactly how it should be, we both look at the same indicator, but enter at different moments.

So, there are so many ways where people could actually end up figuring out how we could end up with a different thing while both also doing TA at the same time. Now expand that to tens of thousands of people who do TA.

[AakZaki]

Haha you got it right! People would really be making out those kind of sentiments basing up into the emotions and mindset that they do have specially on the time that they have failed on doing trading
and this time via making use of technicals and with too much failure and loses then they do really came up with this kind of idea that it doesnt really work and its not something that you could really be able to rely on
without even trying out to realize that these tools are the main ones being used by most traders. You cant really be able to read up a chart without having these indicators on which you cant really be able to make use of price actions anytime. This is why it would really be that normal that traders would really be making use of these indicators.

Naked trading could be considered to those people who are already that professional but still we would really be needing up to make use of these tools so that it could make out that reading up possible
entries and exits which we do know that it would really be relevant or something important. Also, not all the time this market would really be having news or major events on which
you could really be able to watch for.

Those who are already very professional will also not get any guarantees about trading and the tools used. Trading naked by just looking at how market conditions, charts and candles are taken into account quickly, but it is effective or not depending on how the market trend will continue. Analyzing fundamentals so carefully is also needed, because it will also affect the market and prices that will occur.

[KupaCrypto]

While using technical analysis we already have in mind the risk of this type of analysis, since it's based on historical market data, technical analysis basically deals with possibilities and not like a prediction, so at such it shouldn't be 100%  percent relied on,  using technical analysis you will have to prepare for unfavourable situations by setting stop losses, that action alone means that the analyst is admitting that he might be wrong at a certain point.

[goaldigger]

While using technical analysis we already have in mind the risk of this type of analysis, since it's based on historical market data, technical analysis basically deals with possibilities and not like a prediction, so at such it shouldn't be 100%  percent relied on,  using technical analysis you will have to prepare for unfavourable situations by setting stop losses, that action alone means that the analyst is admitting that he might be wrong at a certain point.

Technical analysis is not perfect but it works and many are still doing it and winning.
It’s not always about hitting the target, analysis are more about precaution and a guidelines on what to do next. We have to be more patient and accept the fact that we can’t outrun the market but we can still make money out of it, all you have to do is to be more consistent and be ready for risk.

[Distinctin]

Technical analysis is not 100% accurate I mean there is no analysis that always hit 100% win rate without a single loss or else maybe people are using the technique all the time.

To be honest, TA is reliable when much of people know the technique ex. EMA 100 and 200 is well know moving average to determine long term trend and the price usually reject at that level for 70% all the time I believe because a lot of people believe in it. or simple TA like basic supply and demand zone or support and resistance zone is has 80% accurate in my opinion

Using technical analysis won’t guarantee sure profits. Although it can make some traders end up profitable with trading, but that also depends how those traders use technical analysis mixed with their general knowledge and skills in trading. Because otherwise, if they only rely on using technical analysis alone, that would not create high potentials to come up with a successful trade.

The market is highly unpredictable, and trading only using technical analysis will not be good enough. Good amount of trading experience will be a more reliable one compared to trading focusing only on technical aspects.

[|MINER|]

Trading is fully depend on analysis whatever you called it can be technical analysis or it can be fundamental analysis. Both are important for the professional trading but it is true that there is not guaranteed that for those analysis you will be make 100% profit. Because even then there are lots of successful trader I will also say they also had face loss. But in case of them the loss amount will be much lesser because intelligent trader use the stop loss. Will not be fully completed if we not use technical analysis so we can't underestimate technical analysis. Technical analysis is the essential things for trading.

[AmoreJaz]

While using technical analysis we already have in mind the risk of this type of analysis, since it's based on historical market data, technical analysis basically deals with possibilities and not like a prediction, so at such it shouldn't be 100%  percent relied on,  using technical analysis you will have to prepare for unfavourable situations by setting stop losses, that action alone means that the analyst is admitting that he might be wrong at a certain point.

The reason why most TAs don't work with alts or crypto is due to the fact that the behaviour of these alts are hard to determine esp if the team is playing the wash trading technique. Or they are about to exit the market and they are dumping their holdings. This is why to understand what is indeed going on with the project, you need to keep up with their announcements, social media postings and other channels you think they will be active in.

[hd49728]

The reason why most TAs don't work with alts or crypto is due to the fact that the behaviour of these alts are hard to determine esp if the team is playing the wash trading technique. Or they are about to exit the market and they are dumping their holdings. This is why to understand what is indeed going on with the project, you need to keep up with their announcements, social media postings and other channels you think they will be active in.

Manipulation is key but we have to note about another thing. Trading volume of altcoins is not high and applying technical indicators, technical analysis for altcoins with low trading volume will be risky. Market makers can easily bend the chart with indicators they want to use, and they don't need to spend big capital for manipulation.

For cryptocurrency market, it is true too because total market cap of this market is very small compares to many traditional markets.

[Mahanton]

The reason why most TAs don't work with alts or crypto is due to the fact that the behaviour of these alts are hard to determine esp if the team is playing the wash trading technique. Or they are about to exit the market and they are dumping their holdings. This is why to understand what is indeed going on with the project, you need to keep up with their announcements, social media postings and other channels you think they will be active in.

Manipulation is key but we have to note about another thing. Trading volume of altcoins is not high and applying technical indicators, technical analysis for altcoins with low trading volume will be risky. Market makers can easily bend the chart with indicators they want to use, and they don't need to spend big capital for manipulation.

For cryptocurrency market, it is true too because total market cap of this market is very small compares to many traditional markets.

Manipulation could really mess up whether technical or fundamental analysis on which this is something that cant really be known. This is why it would really be best that you should really be able to know on how to make use of these things because it would really be something that relevant. You cant really just that make yourself that dive in into the market without having any proper analysis on which we know that this is something that you would really be needing to do because once you dont find yourself that having make use of these analysis then you are really just that simply doing gambling. We cant really be able to know on what would happen into the next minute on which it would really be just that right that you should at least be that knowing on what are the the things that you should gonna do.

You might find technical analysis might not really be that something relevant but on the time that you would really be hovering yourself into this market then you would be
able to realize that this is something important.

[Volimack]

In trading you need to know the updated information of the market constantly it will depend on the correct analysis. Technical analysis in trading is a way to predict the most likely outcome, namely future price volatility, by using their past and future periods. Like weather forecasters the tools used in technical analysis and its results cannot provide 100% information about future price movements. It is wise to analyze the market yourself.

[Hypnosis00]

In trading you need to know the updated information of the market constantly it will depend on the correct analysis. Technical analysis in trading is a way to predict the most likely outcome, namely future price volatility, by using their past and future periods. Like weather forecasters the tools used in technical analysis and its results cannot provide 100% information about future price movements. It is wise to analyze the market yourself.

The point is that trading analysis helps us decide to what we gonna do next. With all the available data online - the price chart and the past market events, it was not hard for us to make a simple analysis and even if it was just a simple but yes, the results are at least at a bigger chance close to the actual trend. Those who think that TA is a waste of time and useless, are those people who are not actually in trading. Of course, these people don't see its importance because they are not trading in the first place. 

[God bless u]

Technical analysis is a very impressive tool to analyse a project and try to predict its future performance but there are some other factors as well to ponder. The marketing strategy is also very important as you can see some projects with not good fundamentals but due to very strong marketing they perform very well.

The other factor that can play an important role is those updates that are announced by the projects. Technical analysis analyses data on the basis of previous features so it misses the updates. As we know that when projects don't perform well updates are launched to make projects better so it's a very important factor.

[shield132]

Technical analysis is reliable, I am 100% sure about that because I have been looking at charts for years and you can frequently correctly predict whether charts will go up or down but there are moments when technical analysis can lie to you and that moment happens when there is a dramatic change on the market. When there is a news like China bans Bitcoin mining or Elon Musk's Tesla decided to not accept Bitcoin payments, this kind of news always dramatically affects Bitcoin's price and the predicted price that you built on technical analysis, goes wrong. Also, there are moments when whales sell or buy too many Bitcoins and price goes in an unexpected way.
You have to be always updated if you trade Bitcoins daily. If you aren't updated and solely build your success on technical analysis, you'll fail hard.

[Natsuu]

Some of its limitations includes...
so traders should put all these factors into consideration before making an investment decisions using technical analysis.

I know before that there is someone who is making money trading financial market and what she was using was trading the Lunar Timing which creates a pattern trading depends on size of moon whether it is full moon today, halfmoon, or cloudy. Sound crazy as it is but it does work for her. She's basically trading her guesses and "analysis" with correct risk management yet she make money compare to other people who are over-analyzing the market.

Which means, knowing where the market will go next won't make you money. The only thing that would make you money is to know when to click and when not to click the buy/sell button.

[Barikui1]

technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.
 Some of its limitations includes
1.it is based on assumptions about past market trends, gotten from the past market price and  volume data
2.it is a backward tool subject to interpretation from different traders.
3.Technical analysis will not provide the full details of the market,  that is putting economic and global events into consideration,
so traders should put all these factors into consideration before making an investment decisions using technical analysis.

Are you f**king kidding me? Or do you really know what technical analysis entails? If you where talking of technical indicators, that would have been understandable because I have also gotten a fare share of my own experience with technical indicators, which only shows you what has happened in the market in the past, but not what's going to happen in the future, so if you really want to be successful in trading, using only the analysis of technical indicators to trade is a total failure.

So as a trader , it's very important you  to know what technical analysis entails, because technical analysis is the overall forecasting of the market, and what is expected next of it, if forecasting is the right word to use, so if you are very good at doing technical analysis in trading, their is a very high possibilities of you being profitable, if you can manage your risk properly.