Is technical analysis bullshit?

[mcplums]

I havn't done any research on this subject, but it seems that it has to be?

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.

Am I missing something?

[BillyBobZorton]

I havn't done any research on this subject, but it seems that it has to be?

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.

Am I missing something?

Predicting the market is objectively impossible. TA is based around % chances of something happening. It's a bit like predicting the weather.

[Raystonn]

Yes, it's bullshit.  It's just as much bullshit as fundamental analysis, astrology, and central banking.

[RyNinDaCleM]

It works for me! It's definitely not a 100% guarantee but any edge over the next guy is a definite plus. Also, it's not about predictions, per-se, but more about finding more probable outcomes. For instance, indicators can show a building bias before it is noticeable through forum sentiment (entry points). They can also show weakness from lack of strength and dwindling momentum before the trend ends (exit points).

TA isn't for everyone. If it were, everyone would trade stocks and no one would go to their normal job and brokers/advisers would be out of work. Take Raystonn for instance. He has already proven that he doesn't understand it.

[mcplums]

Predicting the market is objectively impossible. TA is based around % chances of something happening. It's a bit like predicting the weather.

But it can't even work for probabilities of something happening- again, if it was accurate, you could trade on the information (you can arrive at a consistent profit if your 51% chance of a price rise is correct), eliminating the profit and it wouldn't work anymore. You genuinely might as well toss a coin.

[Raystonn]

Take Raystonn for instance. He has already proven that he doesn't understand it.

That's what you got from that post?  Lol.

[mcplums]

TA isn't for everyone. If it were, everyone would trade stocks and no one would go to their normal job and brokers/advisers would be out of work.

This is not possible. Trading is a zero sum game? You can't have everyone making money out of it. After costs, most people are guaranteed to lose money. This is true regardless of how many people there are playing the game, surely?

[Q7]

More or less I would say that. They are just trying to predict price movement using analysis tools and I think the more time spent trying to understand, the more confusing it gets and most of the time it's not even accurate. I remember seeing ads about paying for the guy to teach how to analyze charts but I was thinking, why try to earn from the participants fee when the guy could game the market by himself.

[bri912678]

I have frequently seen 5 different predictions from 5 different TA guys who are all using the same form of TA. If it was an exact science all their predictions should be identical, and correct. It's obviously not an exact science, and none of them get it right all the time.

[mcplums]

I have frequently seen 5 different predictions from 5 different TA guys who are all using the same form of TA.

This sounds exactly like astrology.

[gentlemand]

Three words - self fulfilling prophecy. If enough people believe, then it becomes valid.

[Morecoin Freeman]

There is not one single indicator that will scream BUY or SELL for you, but if you know how to interpret some of the many indicators they could definitely be helpful. Basically the theory behind it is mathematically proven. Still you need to know what to do with this data.

[Bit_Happy]

I havn't done any research on this subject, but it seems that it has to be?

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.

Am I missing something?

Predicting the market is objectively impossible. TA is based around % chances of something happening. It's a bit like predicting the weather.

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

[RyNinDaCleM]

TA isn't for everyone. If it were, everyone would trade stocks and no one would go to their normal job and brokers/advisers would be out of work.

This is not possible. Trading is a zero sum game? You can't have everyone making money out of it. After costs, most people are guaranteed to lose money. This is true regardless of how many people there are playing the game, surely?

I didn't say everyone would profit. If everyone is making money, no one is making money. The point I was making with that sentence was that not everyone can effectively apply TA and it comes down to a LOT of variables in understanding what the charts are telling you, why the indicators do what they do, what could come next and what effect the market participants will have on such future outcomes. Simply reading an explanation about the MACD or RSI on investopedia isn't going to make you know how to use them properly. You need to know the formula, for one, but more importantly, why one dump in price can make it go down deep while another dump may only make it go down a little. Basically, there are other underlying factors than just overbought/oversold. Something that takes experience to understand. Something that many people don't have patience for before writing off the whole idea of TA as "bulshit".

[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.

[Morecoin Freeman]

I agree on using TA with success is a lot about experience, and some specific kind of intelligence (dedication) too.

It is definitely not for everyone. You could see TA as a way to get more insight in the market.
More information is always good. Still you need to know what to do with this information of course...

[Morecoin Freeman]

Oh and I can also give examples of when TA is bullshit:
That is in low volume markets. Like most altcoins. Don't try to go with TA there. It will most likely not work. Altcoins are just thin markets insider info pump and dumps.

TA is quite helpful in bitcoin trading.
How could anything that gives you more information about what is going on not be helpful?

[thms]

TA is just like homeopathy, the amount of science behind it is so tiny that it doesn't produce any visible effects.

[galdur]

Markets with meaningful volume and depth tend to behave in more or less the same manner. There´s profit taking, going long and short, retesting highs and lows et cetera. So, technical analysis is useful - to an extent. Nothing is written in stone. There can be sudden black swans and all sorts of surprises.

[RyNinDaCleM]

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").