Should I trust technical signal?

Some people tell me that technical analysis is bull****. So why are so many traders relying on it then? I’ve been daytrading the USD/JPY for the past few weeks using only technical and it actually gains me 1000 bucks :34:

Technical analysis, if for nothing else are self fulfilling. If you believe it and I believe it, we will both trades with it. Confirming the Bias it produces.

You might want to choose different people to listen to, Ally?

Because it’s the people who are telling you it’s bull**** who are really the bull****ters.

(In some specific cases, they’re making the huge error of conflating “technical analysis” and “indicators” in their own minds, not realising that there’s loads of “TA” that has nothing to do with indicators at all.)

I agree with Lexys, also many inexperienced traders use TA for the wrong reasons and don’t fully understand the mathematics/application behind TA tools and trading indicators.

It does indeed work if used correctly, just don’t use it to fit your results around the curve.

Hello Ally,

I agree with Lexys (as if we ever disagreed)!

There are ‘chartists’ among professional traders too, I am sure, and

indeed charts will be much used by currency analysts, economists, etc.

The way retail traders operate does seem to lend itself a lot to looking

at charts, indicators, etc. but this per se is not a bad thing if you can

make a small but consistent profit…

The mistake, I think, is starting to give indicators and chart levels some

kind of infallibility, as though your patterns on the chart were a thing of

certainty… Patterns are broken and disregarded by the markets many

times over, and levels that you may have thought unbreakable are also

disregarded by the markets (and there is no handy neon sign telling

you that “Today this currency pair will behave irrationally: be prepared”)!

In the end, there is no harm using technical analysis and chart patterns,

as long as you are aware that it is only a matter of probabilities, not of



PS: some traders may operate more on macroeconomics themes, e.g.

long-term position traders, and their entry may not be so focused on

technicals, given that their choice of stocks/assets to buy/sell will be

based on wider themes concerning macroeconomic factors, geo-political

factors, a company’s earnings/growth projections, etc.

Themes that span months and years do not rely so much on

pip-perfect, precise entries, in the sense that you do expect to be ‘wrong’

at some point (and have to tolerate large draw-downs, sometimes, as

your position slowly, slowly moves up and down through weeks and months

toward your ultimate target)…

What do you think, Lexy?

This wins my vote for Post of the Day

What pip me happy said.

This. Exactly.

I can’t comment on your “macroeconomic point” at all, because I don’t understand macroeconomics or know anything much about it at all. :8:

Personally, I don’t use indicators but [I]all[/I] my trading is TA-based. And exactly as PMH says, it’s a probability-function. I can never predict the outcome of any trade with anything approaching certainty at all, and don’t need to. I can predict the [I][U]collective[/U][/I] outcomes of my next [I][U]300[/U][/I] trades to an accuracy of plus or minus a percentage point or two, though (so far, anyway!). Fortunately.

(I’m not suggesting that even indicators “can’t work” for others, of course: I know there are people here making a living trading from them.)

I think Warren Buffett is one of those people that thinks little of Technical Analysis, he trades on Fundamentals, if a company is under valued and has a long term growth potential he is a buyer without ever looking at a chart. I don’t have access to all the information Buffett has so for me I use TA. TA is simply the study of price and the direction it is moving, many of us make it far more complicated then it needs to be with indicators and oscillators, which is likely why some see it as BS.

Thank you guys for answering my question! I have only started trading for like 2 months and only use indicators and oscillators to detect signal trend ever since (indeed I kind of associating technical analysis with those indicators, like Lexys said). Can you suggest some other TA that I can use? (easy stuffs first please cause I’m still at preschool level :stuck_out_tongue:

Take a look at the 3 ducks system. Only uses 1 indicator but on 3 time frames. Very easy to set up and steady, reliable system

He does indeed.

But I would contend that that’s really “investing”, not “trading” at all, as we’re using the term in this forum?

Trading surely implies buying and selling with at least [I]some[/I] kind of frequency, whereas Buffet’s policy is famously “buy and hold”.

[B]Support and resistance[/B].

It’s non-indicator-TA; it’s (in my opinion) one of the most significant issues in trading of which eventual understanding and familiarity predicate towards profit; it’s what all my own trading is based on to a greater or a lesser extent; it’s certainly “easy stuff”, as these things go. :slight_smile:

(Good suggestion from Eddie, also, of course, in the post above this one.)

Indeed we tried to ‘nail’ this one on my thread, here:

If all three bills point in the same way, you have signal (buy or sell):

There are trader which only trade with price action and candlestick paattern , but still they can making good profit, in my opinion is understanding with the market behaviour will making easiness in trading and indicator only help tool trader will know if they backtest indicator as signal confirmation for several month

This post is helpful for me i’m new to forex too and i don’t know if i should combine all 3 types of analysis ot just focus on technical to trade :51:

No analysis is 100% certain and that certainly applies to technical analysis too. That said, I prefer to it to fundamental analysis, but with the understanding that I am dealing with probabilities, which more often than not are quite high.

Humans are creatures of habit and technical analysis allows us to see how we have behaved in the past, giving clues as to the likely way we may behave in the future, given similar circumstances

Technical analysis works because the charts give you all the data of supply/demand, panic/greed in a visual way.

Thanks I’m checking that out right now. There is also a threat on 3 ducks here which seems very helpful