[Nemesis]

If technical analysis really works, howcome there is no one method out there that can be used to trade consistently profitable ?

If there was, there would not be any need for snake oil vendors selling their own failing systems.

Usually three things happen:

1) The method is so obscured it can't be learnt or verified

2) Too subjective

3) It's truly a piece of trash.

For what is worth, I'm in favor of technical analysis, just not the kind that is readily available because you can only teach yourself, and that's the study of price action. The stuff that really works takes enormous amount of screen time to grasp correctly, and that's assuming discipline and smart money management is in check.

Unfortunately there is a lot of ego in this market, because afterall we are talking about money, this leads to lies and deceit. Tough business, tough career. Make sure you really want this before you make a decision, took me 6 long years to even begin to obtain a freaking clue.

[SIUYA]

Technical analysis is nothing more than a tool that helps traders manage and quantify their risk, trade management, money management. Its a road map for a repeatable series of trades.

(this incorporates all entry, exit levels, discipline, emotions etc

[rs1]

Originally Posted by SIUYA »

Technical analysis is nothing more than a tool that helps traders manage and quantify their risk, trade management, money management. Its a road map for a repeatable series of trades.

(this incorporates all entry, exit levels, discipline, emotions etc

Exactly, well said. One thing I never understand about this topic is when people ask "does technical analysis work?". What does that actually mean? Do you mean does it work 100% of the time without fail? I think we all know that nothing really works 100% of the time. Or does it work 60%, 70%,50%? And what do you mean by work - surely everyone's definition of work is different. Some might have a profit target of 1R, 2R,3R etc. The question actually makes no sense. The best answer is the one given above, imho.

Technical analysis is great as an unemotional filter to put onto markets and give you reasons to get in and out. Your testing and observation will indicate good setups and profit targets, trailing stops and the rest is your money management. That is what trading is all about.

[AmCan1]

At first I began to read Nemisis' comments and I began to think, "oh, no.." I do not agree. But as I read further I was able to get his point and he does make some good ones. Lots of great points actually. What if we just asked does 'analysis' work, and leave out the word technical. It's all semantics really. rs1 and Siuya say it great. I would say that it only works if it does. lol.. I mean, after the analysis, you're either going to go for it or not. Then you'll find out.

I'm not technical in my own opinion of myself but when I tell people what I do, for a second they're interested. They ask a question or two, and when I try to answer, usually their eyes begin to glaze over and the conversation is done. I guess it was too technical. For someone to imagine all the time I spend in front of charts.. they become very antsy, the very definition of technical, lol..

Good proper analysis, technical or not, will work, even if it shows you that what you are analyzing is a bad idea and shouldn't be traded. That qualifies as working too, no? Unless it would have worked and your analysis was bad. Bad analysis obviously won't work. Garbage in, garbage out, as they say. Sorry guys.. Just trying to add a little levity to a very important question, while hopefully making a good point that contributes a bit.

[bathrobe]

I heard a great quote from Jim Rogers in which he said the only people he knows of who got rich of technical analysis are those selling it.

[cuttshot]

I think the reason many people struggle with technical analysis is the fact that they over analyze. How many times have you seen people post a chart on a forum that has 10 different indicators working at the same time. Combining multiple indicators doesn't always mean a better result. In fact it can lead to disaster because the more indicators you add will just lead to trying to find a reason not to take a trade. You will be stuck with the paralysis by analysis syndrome.

With that being said, technical analysis if used correctly can be a very powerful tool. You just need to keep things simple. Find a few indicators that fit what you are trying to do and then test to make sure they put the odds in your favor. For example being familiar with basic moving averages can definately help put those odds in your favor.

Making sure you know how to read price action, support/resistance levels, highs/lows is much more important than any indicator.

[Tiobingo]

For me, the thing about technical analysis that is important to realize, is the belief that everything happening in the world that effects a market, is reduced down to the current price. So as price moves, it is supposed to be a reflection of the change in balance between the two opposing forces, buyers and sellers. Charts, indicators, etc. are just tools to help interpret the price action. In my view, it is easier to interpret price action than it is to interpret every fundemental fact (or fiction) that occurs at each moment, worldwide. That's not to say you can't take advantage of specific world events. I believe you surely can. But you can look at the price action and use technical analysis to take advantage of it. IMO, tech analysis works best when you focus primarily on price action and then use other TA tools to help confirm your assumptions.

[cuttshot]

tiobingo I agree price action/technicals will tell you everything you need to know about a market. I really don't care about the results of an economic release or diving into a companies earnings report because all that matters is the reaction to the news. Reading price action and a few technicals will privide a road map which is all I need.