Technical Analysis: Is it voodoo? Or does it work?

[cooter]

Market Proflie is just a glorified barchart with its horizontal axis on its side. Another representation of time, price and (implicitly) volume - that's all.

[cooter]

Market internals such as $TICK, $TRIN, $WPCVA and $VIX.X - do you consider these as leading or laggard in composition and application (how they're made up, and how they are used)?

	Quote:	weiwei
	My experience on trading with TA indicators is this. On swing trading,(using of daily chart, holding of more then 2 days). TA with price derived indicators do work, but a lot of work to find the right fit for the right market. I do have a few swing trading systems which are doing very well base on TA. on Intraday trading: Lagging indicators, such as RSI, CCI ect, has not been working for me. Only after I switch to "Now indicators",(tape, Volume with price, inter-market relationships) market starts to make sense for me and my trading become stable. weiwei

[weiwei]

$ticks, use it a lot for intraday trading. To me market internals are not leading nor laggard. They tells me what is happening now with relation to price on Index markets. and helps me to compile that info for entry or exit.

weiwei

[notouch]

I hear what you say dalby. It takes time for price to reflect new fundamental information so to say all information is reflected in price is total nonsense. The price of corn is still reacting to a surprising fundamental report released on Friday and if this week's employment report is a shock the currency markets will still be reacting next week.

[Anonymous]

Technical analysis, also known as charting, is the study of the trading history (the price and volume over time) of any type of security (stocks, commodities, etc.) to attempt to predict future prices. In its purest form, technical analysis is concerned only with the actual price behavior of the instrument, based on the theory that all other factors affecting valuation will be reflected in the price before an investor can become aware of them through other channels.---wikipedia

Like it or not, if you use TA you are assuming that EVERYTHING THAT IS KNOWN ABOUT A STOCK, COMMODITY, INDEX, OR CURRENCY IS REFLECTED IN PRICE.

Does that mean that there is no such thing as a news surprise? Of course not. However, that news event will be immediately reflected in price and usually before most retail traders can react to it.

My personal dislike of the above definition has to do with the word PREDICTION. The future is unknown and not knowable. Prediction is not possible nor necessary.

[Anonymous]

* Please do not equate when news comes out and is known to ALL as meaning that there are not those who ALREADY know it. The playing field is not level. Smart Money has better, quicker, and more thorough access than the typical retail trader. ERGO price must reflect ALL known events.

And the news shocks? Well, if they are truly shocks then price will reflect them instantly. But it is a good bet that somebody knew something. *

[notouch]

Not all market participants make instant trading decisions so to say price instantly reflects all known events is just silly. News takes a while to digest and price takes a while to reflect the new fundamentals. The post-FOMC market reaction is a good example. Market participants were reacting to the statement at least 30 minutes after it was released.

[Kiwi]

	Quote:	PivotProfiler
	Like it or not, if you use TA you are assuming that EVERYTHING THAT IS KNOWN ABOUT A STOCK, COMMODITY, INDEX, OR CURRENCY IS REFLECTED IN PRICE.

If by IS you mean its there NOW then No. It takes time for the markets to adjust to information so although peoples reactions to information will be reflected in price, there is a time lag and opportunity for both fundamentalists and trend followers on various timescales as a result.

Key points from a trading perspective are that there is lag and that what is reflected in price is peoples reactions to information.

[Soultrader]

.... I totally regret starting this thread What I really meant was price patterns. I actually had this debate in a few other places and I came to a conclusion not to bring it up. Yes all of you are right. MP, Pivots, etc... are all TA.

I should of clearly stated price patterns ONLY which I think are total crap but once again some traders make money off it so they must work for a few traders.

[notouch]

So double tops and double bottoms are total crap? One of your trading methods is a test of the low at lower volume which is just trading a double bottom with the addition of volume analysis (which is how most people trade double bottoms). Now I'm confused.