This clears up a lot of my questions. And when I say TA, I mean the real basic trendlines, Support and Resistance, etc. By no means I am a fan of indicators pushed by the Brokers.
Combining trend lines with Supply and Demand has without a doubt yielded very good results for the last couple of months and I will be trying to get more data as we progress ahead.
Your Oil example is bang on and confirms that prices react in a very similar fashion at a particular price point in the same was as they had reacted in the past.
Why I started using TA without knowing why?
Simple answer, I was and still kinda am an amateur at this. So started with what everyone else is doing. A little technical here, some fundamentals from there, but that didnât work out for me. My bad.
Nowadays I am just looking at trendlines, Support & Resistance, patterns and Supply & Demand which have yielded fairly good results.
If you want to read an interesting, much longer, more detailed explanation of those patterns and [U][I]why[/I][/U] they tend to repeat, thereâs a particularly good one in Dr. Alexander Elderâs book [I]Trading for a Living[/I] (he used to be a psychiatrist before becoming a professional trader, and he âknows about these thingsâ). But what Rhodytrader said, above, about repeating behavioural patterns, is certainly what it boils down to.
he did like everyone did who started trading after the 1990ies. technical analysis is proclaimed as the holy grail system by brokers, bucket shops and god knows who else. its advertised as the best that can make you money in markets and it is advertised because its so pretty and colourful with all the fancy indicators. comparable with a casino with many fancy colours and âhidden seecrets which lead you to sucessâ. it is what people want to see and it is what tells them its easy and what makes them start trading. just look at the advertisements advertising fancy charts and superb trading platforms in tv. add to that every few months a newspaper advertising âsome guyâ from âsomewhereâ who is a complete beginer in trading and made with an initial investment of 1000 in a year 1.000.000
im in no way hinting that technical doesnt work or is a scam. but it is what attracts thw new people to trading because its much prettier and much easier then going through the cash flow or the win/loss calculation or the future prospecrs or the KGV Of companies listed in S$P or the Dow or the Nasdaq. its prettier and more fancy then reading a hundret white papers with half a million numbers and its much easier taking way less effort.
and if you want my opinion. for people who did not educate themselves on a college connected with economics or got grown into the investment and trading field by very experienced people- it is the only weapon they actually can use to try to be sucesfull.
I think it still is, in some quarters, but for different reasons and in different ways from âthe old daysâ?
And in these days of online forums where huge numbers of aspiring/amateur traders can exchange notes, there also tends to be quite a bit of confusion between âtechnical analysisâ and âindicatorsâ, with some people imagining that these terms are more or less interchangeable.
Guilty of assuming technical analysis and indicators are almost the same thing! Glad to have cleared it out in the beginning of my trading career though!
It means that so many people follow certain types of technical analysis methods that they essentially cause the market to move in the indicated direction.
Thatâs exactly what I thought! Me and you donât have the power to make the market move by just sitting behind the computer screens with our chum change in the trillion $ market!
