Is TA evidence-based?

[Wary]

Thanks to everybody who took part in the poll (https://bitcointalk.org/index.php?topic=730862.0).
I don't know established name for the "USA did 9/11", hypotesis, so I'll call it "truth" here, for brevity.
And my apologies to those that think it wasn't sensitive enough to run such a poll. Probably you are right and I should have used the "Americans weren't in the Moon" instead.

My opinion on the questions.

I don't know if TA works. Actually the purpose of the poll was to find it out. (I know, it's a bit too ambitious, to draw any conclusions based on poll of 48 votes). I don't believe in "truth". No, I'm not been conditioned by US propaganda. I'm not american, I have grown in an anti-american ideology atmosphere and my current ideology is anarcho-capitalism. Still, the "truth" theory doesn't fit in my world picture. I'm not saying that it's impossible, but I'm saying that it is extraordinary claim and as such it requires extraordinary evidences. While, AFAIK, the evidences are even less than ordinary. Therefore, I think that people that believe in "truth" doing it not because of evidences, but because of their desire to believe. Or, to put it other way, the "truth" isn't extraordinary claim for them, it fits easily in their world picture because their world picture is strongly distorted by their (dis)likes. I think that "truth"ers are more prone to self-deception than average people. So if we'll find out that a hypothesis (say, TA) is supported mainly by "truth"ers it may be sign of absence of good evidences for the hypothesis (and of it's strong emotional appeal).

OK, now the results.
(Results are adjusted: I've moved one vote to other cell, my sincere apologies to JustAnotherSheep ).

Code:

                |------------|
                |      TA    |
                |------|-----|
                | yes  | no  |
|--------|------|------|-----|
| truth  | yes  | 15   |  8  |
|        |------|------|-----|
|        | no   | 14   | 11  |
|--------|------|------|-----|  

What does math tell us?

1. About half of us (25:23) believe in "truth".
2. TA is slightly more credible (29:23) than "truth".
3. Correlation between belief in "truth" and belief in TA is 0.094 (maximal possible = 1, so the correlation is quite weak).

What does it mean?

1 is much more than I expected, and probably much more than among average population. Why? My versions:
    a) It's bitcoin forum. More anti-establishment people here. Revolutionaries we are.
    b) It's speculation forum. More self-decepting people here. Gamblers we are.
2 is good news for TA supporters: TA may have real evidences for it.
3 is not as big as I was afraid of. This is not bad news for TA supporters: although there is some element of blind faith in TA support, it is not large, so evidences for TA may be real after all.

tl;dr; Poll shows: TA is not based purely on blind faith.

EDIT: fixed math in 2.

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[brewsterz]

sorry for my stupidity but what is TA?

[Patel]

sorry for my stupidity but what is TA?

trend analysis, for predicting prices/rallies/downfall

[Wary]

sorry for my stupidity but what is TA?

Technical Analysis. Predicting future price movement based on previous price/volume history. Charts, trends, indicators etc. http://en.wikipedia.org/wiki/Technical_analysis

[UnDerDoG81]

sorry for my stupidity but what is TA?

trend analysis, for predicting prices/rallies/downfall

Lol somebody said "terrorist activity" and I believed that  

[Wary]

sorry for my stupidity but what is TA?

trend analysis, for predicting prices/rallies/downfall

Lol somebody said "terrorist activity" and I believed that  

Did you vote based on this? If yes, I have to correct the results 

[Chicowash]

sorry for my stupidity but what is TA?

trend analysis, for predicting prices/rallies/downfall

Lol somebody said "terrorist activity" and I believed that  

That is a ridiculous explaining of TA
By reading all the article you truly believed that ?

[trader001]

TA is empirical based. But then, past performance is not a guarantee of future returns.

[HarmonLi]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

[akujin]

There's a high chance that the whale controlling the price uses TA so... do what he does and ride his wave 

[DjPxH]

There are people who back-tested certain indicators. It's a very interesting example. And actually showed that simple indicators like the macd actually perform pretty well when used to base your trading decisions on them. But More complex indicators may turn out to be difficult to rate, because only time will tell if they're really useful. I believe in light TA

[jazzhot]

TA is empirical based. But then, past performance is not a guarantee of future returns.

This is what I mean, why looking at past charts would help to predict the future?
I think that they are two unrelated things.

[Wary]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

I suspect it's the explanation for the Fibonacci, for example.

[BTCtrader71]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

But it doesn't really make sense that TA in general should be a self-fulfilling prophecy. In general terms: If TA predicts that the price will be low at time t1 and high at time t2, then anyone who believes in that particular prediction will plan to buy at t1 and sell at t2. The effect will be to drive up the price at t1 and to drive down the price at t2. IOW, the reverse of what a self-fulfilling prophecy would do. (Self-preventing? self-inhibiting? ... )

[Wary]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

But it doesn't really make sense that TA in general should be a self-fulfilling prophecy. In general terms: If TA predicts that the price will be low at time t1 and high at time t2, then anyone who believes in that particular prediction will plan to buy at t1 and sell at t2. The effect will be to drive up the price at t1 and to drive down the price at t2. IOW, the reverse of what a self-fulfilling prophecy would do. (Self-preventing? self-inhibiting? ... )

From the other hand, it can explain trends existence: if price grows and everybody believe it will continue to grow for some time, everybody will buy, to ride the trend, and the price will keep growing.

[BTCtrader71]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

But it doesn't really make sense that TA in general should be a self-fulfilling prophecy. In general terms: If TA predicts that the price will be low at time t1 and high at time t2, then anyone who believes in that particular prediction will plan to buy at t1 and sell at t2. The effect will be to drive up the price at t1 and to drive down the price at t2. IOW, the reverse of what a self-fulfilling prophecy would do. (Self-preventing? self-inhibiting? ... )

From the other hand, it can explain trends existence: if price grows and everybody believe it will continue to grow for some time, everybody will buy, to ride the trend, and the price will keep growing.

TA is at heart a follow-the-herd mentality. As opposed to fundamental analysis, which is a lead-the-herd mentality. So you are right: if the price starts to go up, then the typical TA reaction is to say that "the uptrend is confirmed" which means it's time to buy. And vice versa.

But I propose the following theorem:
It is impossible for all three of the following to be true regarding a particular TA pattern:
1) The pattern makes well-defined predictions of price movements.
2) The pattern is widely recognized by lots of traders who act on it.
3) The pattern actually plays out as predicted.

My argument is basically what I said in my earlier post, which is that if 1) and 2) are true, then they will cause the opposite of 3) to be true. iow, the more well defined it is, and the more widely recognized it is, then the more untrue it becomes.

[Wary]

Difficult, I subscribe to the self-fulfilling-prophecy theory a lot of people around here are propagating. If everyone's watching their indicators, they'll all buy at once and thus accelerate a rallye! But I also think that moderate indicators like MACD do work! Even if people aren't looking at them while making trading decisions!

But it doesn't really make sense that TA in general should be a self-fulfilling prophecy. In general terms: If TA predicts that the price will be low at time t1 and high at time t2, then anyone who believes in that particular prediction will plan to buy at t1 and sell at t2. The effect will be to drive up the price at t1 and to drive down the price at t2. IOW, the reverse of what a self-fulfilling prophecy would do. (Self-preventing? self-inhibiting? ... )

From the other hand, it can explain trends existence: if price grows and everybody believe it will continue to grow for some time, everybody will buy, to ride the trend, and the price will keep growing.

TA is at heart a follow-the-herd mentality. As opposed to fundamental analysis, which is a lead-the-herd mentality. So you are right: if the price starts to go up, then the typical TA reaction is to say that "the uptrend is confirmed" which means it's time to buy. And vice versa.

But I propose the following theorem:
It is impossible for all three of the following to be true regarding a particular TA pattern:
1) The pattern makes well-defined predictions of price movements.
2) The pattern is widely recognized by lots of traders who act on it.
3) The pattern actually plays out as predicted.

My argument is basically what I said in my earlier post, which is that if 1) and 2) are true, then they will cause the opposite of 3) to be true. iow, the more well defined it is, and the more widely recognized it is, then the more untrue it becomes.

I agree with you on it. With trends it probably looks like entering/exiting too late.

So, my current stance on TA is:
1) Patterns do exist.
    Proof: Statistical evidences (fat tails etc) and my poll that shows that belief in TA is (almost) not correlated with self-deception.
2) However, an average trader cannot profit from it.
    Proof: trading is zero-sum game, so majority loses. If this majority uses some TA, majority of TA users cannot profit from it.
3) However, an average trader wrongly believes he can profit from it.
    Proof: he trades using TA.

So, at which conditions you can profit from TA? I can think of three cases:
-You just get lucky.
-Average trader is using TA, but you are much better in TA than average trader (you have a magic monkey, for example ).
-Average trader is not using TA (influx of noobs), while you are using those TA's instruments that cannot be explained just by belief in TA (like, you use MACD, but not fibs).

[Roy Badami]

Probably you are right and I should have used the "Americans weren't in the Moon" instead.

I've never understood that one.  The Apollo astronauts left corner cubes on the moon (or retroreflectors, to give them their more complicated-sounding name).  You can tell they're there (well *you* probably can't, but people can) by shining powerful lasers at the moon and measuring the reflection.  It's an experiment that has been done many times, in order to measure the movements to the moon (which is why they were left there).

Now, granted, the Russians also left corner cubes on the moon, dropped from an orbiting spacecraft (the Russians never landed).  But the American corner cubes work better, because the astronauts could line them up properly and point them facing the Earth.

So yes, I can't *prove* that the Americans weren't lucky, and that their corner cubes didn't just happen to fall on the moon facing exactly the right direction.  But at the very least we can prove, in a relatively easily reproducible experiment, that there is artificial equipment present on the moon.  And it's funny how the people who claim the moon landing was faked almost never talk about this stuff.

roy

[BTCtrader71]

So, my current stance on TA is:
1) Patterns do exist.
    Proof: Statistical evidences (fat tails etc) and my poll that shows that belief in TA is (almost) not correlated with self-deception.
2) However, an average trader cannot profit from it.
    Proof: trading is zero-sum game, so majority loses. If this majority uses some TA, majority of TA users cannot profit from it.
3) However, an average trader wrongly believes he can profit from it.
    Proof: he trades using TA.

So, at which conditions you can profit from TA? I can thing of three cases:
-You just get lucky.
-Average trader is using TA, but you are much better in TA than average trader (you have a magic monkey, for example ).
-Average trader is not using TA (influx of noobs), while you are using those TA's instruments that cannot be explained just by belief in TA (like, you use MACD, but not fibs).

That's pretty much my stance on TA. And your discussion of "the truth" in the OP is basically my stance on whether the US did 9/11. And my ideology is somewhere in the vicinity of anarcho-capitalism. (I say "somewhere in the vicinity" because that term probably implies different things to different people, and I am not all of those things. Recently, agorism has caught my attention, though I have not studied it in depth.)

[Wary]

Probably you are right and I should have used the "Americans weren't in the Moon" instead.

I've never understood that one.  The Apollo astronauts left corner cubes on the moon (or retroreflectors, to give them their more complicated-sounding name).  You can tell they're there (well *you* probably can't, but people can) by shining powerful lasers at the moon and measuring the reflection.  It's an experiment that has been done many times, in order to measure the movements to the moon (which is why they were left there).

Now, granted, the Russians also left corner cubes on the moon, dropped from an orbiting spacecraft (the Russians never landed).  But the American corner cubes work better, because the astronauts could line them up properly and point them facing the Earth.

So yes, I can't *prove* that the Americans weren't lucky, and that their corner cubes didn't just happen to fall on the moon facing exactly the right direction.  But at the very least we can prove, in a relatively easily reproducible experiment, that there is artificial equipment present on the moon.  And it's funny how the people who claim the moon landing was faked almost never talk about this stuff.

roy

I don't know what is their explanation for it, but I'm sure, they have some. Shrinks say that you just can't refute systematic delusions, doesn't matter how hard you try. In fact, in some cases patients manage to persuade others, normal people, and they start to believe in their delusions too. It's catching