Is technical analysis bullshit?

[yvv]

TA provides you with very important statistics about the past of the market. Projecting it onto future is fundamentally wrong. It is like predicting an outcome of dice throw based on past results. You need to have fundamental data in addition to past statistics to predict a future market.

Nonsense!
In trading, there are only 2 outcomes to price movement from the current price rather than 6 or 12 like with dice... Right there odds are more in our favor. Then we have other data like volume. This tells us where more force is being applied, up or down, plus a multitude of other methods for trying to determine what direction comes next. They aren't even close to the same thing.

I use fundamentals to say that as long as Bitcoin doesn't die, the far future should go way up, and that is it. The fundamentals don't mean shit in a mostly speculative market. $2->$1200->150 in 2.5 years is a clear example that fundamentals aren't at play here. One more example would be the numerous large-scale businesses that began accepting Bitcoin over the last year, and only sparked pump and dumps.

Note, this is not a dig at the fundamentals, only that they aren't currently important for the price discovery or used by anyone but bag holders (forced or otherwise) or long term investors (who fall into "otherwise").

Blah blah blah....

You can't extrapolate past statistical data onto future. Period.

[btc4lifer]

Blah blah blah....

I resemble that remark!

[intighet]

Price is demonstrably not a random walk. This implies that there exists some TA that yields results.

For example, one of the best-studied deviations from a random walk is the phenomenon of 'drift', or trending behavior.

[bassclef]

If you have above average intelligence, can learn quickly and have the patience to watch how and why the market moves, yes you can learn how to apply TA correctly and make money. There are professionals doing it every day.

Most people, however, are not open minded, of below average intelligence and are not patient. For them, TA does not work. Trading attracts some of the brightest minds around and the market will quickly take your money if you don't know what you're doing.

[bri912678]

If you have above average intelligence, can learn quickly and have the patience to watch how and why the market moves, yes you can learn how to apply TA correctly and make money. There are professionals doing it every day.

Most people, however, are not open minded, of below average intelligence and are not patient. For them, TA does not work. Trading attracts some of the brightest minds around and the market will quickly take your money if you don't know what you're doing.

When the Euro was crashing a TA expert said the indicators were stressed to almost their maximum and were useless in that situation. Ironically, that's exactly when you want to predict what the price will do the most. Do you think in extreme crashes that most TA indicators are useless?

[Odalv]

If you have above average intelligence, can learn quickly and have the patience to watch how and why the market moves, yes you can learn how to apply TA correctly and make money. There are professionals doing it every day.

Most people, however, are not open minded, of below average intelligence and are not patient. For them, TA does not work. Trading attracts some of the brightest minds around and the market will quickly take your money if you don't know what you're doing.

When the Euro was crashing a TA expert said the indicators were stressed to almost their maximum and were useless in that situation. Ironically, that's exactly when you want to predict what the price will do the most. Do you think in extreme crashes that most TA indicators are useless?

Insider information = best TA

[uki]

True, TA is a tool (sometimes highly overrated)
Fundamentals are more important, especially with something historic like Bitcoin.

That is very true, and it has to be clearly said that for now we had very little fundamental developments that could support the price of Bitcoin. For now the two past bubbles were made on the pure speculation, with not much fundamentals involved.

[JustAnotherSheep]

Blah blah blah....

You can't extrapolate past statistical data onto future. Period.

And why is that, exactly? If past market patterns such as price/indicator divergences have repeatedly yielded a statistically significant amount of valid predictive signals, why should one assume it would suddenly stop doing so in the future?

Granted, no TA pattern always has the same guaranteed outcome, but there are many (such as the aforementioned divergences) that historically have been shown to have predictive value beyond random chance, and when used in conjunction with other relatively reliable patterns, greatly increases the probability of a projected outcome as further confirmation rules out more uncertainty caused by the inherently probabilistic signals.

Of course things can also change, and previously reliable patterns may at some time end up not working as well (or at all), which will be noticed and taken into account by the analyst in order to adapt to a dynamic market. But until such time I do not see why it is "fundamentally wrong" to assume past data of market behavior can be extrapolated into the future.

[johnyj]

Buy and hold is much much more useful, especially for bitcoin, no amount of TA can defeat a long term buy and hold strategy 

[yvv]

Blah blah blah....

You can't extrapolate past statistical data onto future. Period.

And why is that, exactly?
....

Because extrapolations lie. Try it, learn it hard way.

[alani123]

My father used to work as an economist, he studied macroeconomics in uni yet he calls bullshit on technical analysis.

I've tried doing TA myself and I can tell you that it's really hard to come to a logical conclusion solely relying on statistical evidence. Many people that do TA professionally base their predictions on real world events, they study the news more than the stats but that's something they'll never tell you.

There's too much hypocrisy when it comes to people that claim to be good at TA. I personally wouldn't say that it's bullshit. I wouldn't base my trading movements on an analysis alone especially with bitcoin. In the case that you're starting to think that TA TA is bullshit, then you should believe that bitcoin TA is bullshit*2.

You know how volatile and open bitcoin is, there's no way to predict long or short term movements solely on stats.

[galdur]

It´s a tool and like with other relatively complex tools you need to learn and train to be able to understand and use them. Otherwise you may very well be clueless as to their functionality - I guess.

[Wary]

If it did work (by work I mean, allow you to predict future short term price movements from past data with more than 50% accuracy) then everyone would do it, and the profit would be eliminated, so it would no longer work. Any method of predicting future (short term) price movements cannot consistently work by this logic, without insider information.

The same story with chess. If some winning chess strategy existed, everybody would learn it and become the champion, which is not happening. Therefore winning in chess is pure luck, like winning a lottery.  

[thms]

The same story with chess. If some winning chess strategy existed, everybody would learn it and become the champion, which is not happening. Therefore winning in chess is pure luck, like winning a lottery.  
[/quote]

This makes no sense really..

[alani123]

Therefore winning in chess is pure luck, like winning a lottery.

I can't really understand how you compare chess with lotteries.

[galdur]

Therefore winning in chess is pure luck, like winning a lottery.

I can't really understand how you compare chess with lotteries.

Looks like he was being sarcastic and pretty sneaky about it. Probably one of them chess playing wankers, they can be crafty as hell.

[Raystonn]

The same story with chess. If some winning chess strategy existed, everybody would learn it and become the champion, which is not happening. Therefore winning in chess is pure luck, like winning a lottery.  

Yes, you might say financial markets are a chess game where the players, dimensions of the board, and movement rules for pieces change after every move.  A strategy that worked last time to gain a piece is in no way guaranteed to work again.  The odds of it working again are inversely proportional to the intelligence and alertness of the players who were present last time, are present once again, and still have significant funds.

[Wary]

Therefore winning in chess is pure luck, like winning a lottery.

I can't really understand how you compare chess with lotteries.

It was meant to be a joke.

EDIT: By I'll try again:
Chess is zero sum game, therefore chess theory is BS.

[Diabolicus]

TA works as good or bad as any other self-fulfilling prophecy. It's 90% psychology and 10% statistical probabilities.

[Amph]

they are based on probability in fact, they don't really predict anything , it's more of a talk about the "movement"/trend

Buy and hold is much much more useful, especially for bitcoin, no amount of TA can defeat a long term buy and hold strategy

what if bitcoin die, or stay at bad value indefinitely?