What is it? does Technical analysis really work or is it just guess work? Does a trading system in the long run just fail? Or are we just guessing on where prices goes and if the trade goes the other way of your analysis does it mean that your analysis is wrong? Im just very confused about the forex market the more i get into it the more i think its just a another form of gambling. Like to hear what others have to say.
MasterPlan
Hi Masterplan, good to see you are still around. Surely if it helps you as an individual trader then its worthwhile. I have formally studied it as a dipoma and the individual indicators have definite relevance to various aspects of the market. Whether this helps you more than guesswork when it comes to trading is another matter. Dont forget technical analysis is the province of analysts NOT traders. The latter seek to use these insights to decide on how to trade a market. That is not what they were designed for and when you are taught the skills of an analyst this is made clear. Ultimately trading is more about individual psychology and a basic understanding of crowd psychology and little to do with indicators per se
Can you explain to me what you mean by crowd psychology and individual psychology?
P.S. where in the hell did you go to school to get this diploma?
They both relate to emotions. Within yourself it is often said to relate to fear and greed but I think many emotions, depression, anger, revenge all taint our trading decisions. With crowds they tend to conform, get excited and hysterical and follow each other like lemmings. The ability to control your own emotions and objectively examine what the crowd is up to is of critical importance when you are looking to take trading decisions
I studied with the Securities Institute of Australia which has 2 units dedicated to technical analysis. Possession of those entitled me to the award of a diploma from the Australian Association of Technical Analysts
I wonder if they have any technical schools in the States.
My personal opinion is that indicators by themselves are essentially no better than flipping a coin. They are lagging so by definitiion they move in response to what the market has already done and not in anticipation of what it will do. Indicators used alone are pretty much a crap shoot and do not capture any kind of market psychology.
That said, however, i do not believe Technical analysis is guess work either. The concept of Support and Resistance is very powerful and i have seen it work time and time again because, in my opinion, it does capture the essence of crowd psychology.
The Market Technicians Association has a three level Chartered Market Technician (CMT) program.
“Dont forget technical analysis is the province of analysts NOT traders.”
It’s true, technicals analysis are just indicators. Generally they study the past, not the present, not the futur.
Personnaly i just use technical analysis to avoid big errors like emotional decisions.
Technical analysis is not just about indicators. But I do agree with it being a study of the past. Even a simple bar chart is just a depiction of past prices.