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> technical analysis which is basically patterns proven to repeat in markets for a variety of fundamental reasons Technical analysis is merely another name for
by gnaritas 9y ago
> technical analysis which is basically patterns proven to repeat in markets for a variety of fundamental reasons
Technical analysis is merely another name for hindsight bias. Those patterns only look like they repeat in hindsight because you're ignoring all the failed patterns that setup right but failed to play out and thus don't look like the pattern in hindsight.
Technical analysis is exactly like astrology and is in no way grounded in science. Quantitative analysis is based in the scientific process, technical analysis is superstition created by visual traders who think they see patterns but fail to understand biases. You are confusing the two, technical analysis is a pattern library of nonsense like "head and shoulders" or "dead cat bounce" based purely on visual patterns in price data that only "appear" to repeat due to hindsight bias. It is in no way remotely scientific.
I've spend thousands of hours testing trading patterns in Forex, they're all nonsense that lose as much as they win over any decent sample size which equates to random.
Edit: to the guy below, You should ask for sources that back up the claims that it does work. You won't find any, it's trader superstition, not science. You don't have to prove things don't work; you have to prove they do. At least if you want to call it based in science. However, the field of quantitative analysis itself is proof technical analysis doesn't work; it's what happened with people who actually knew math got into trading and discovered the technical analysis superstition that visual traders who lack math skills made up.
- lz400 9y agoCan you provide sources that back up your claim with studies of inefficiency of technical analysis? I'm not busting your balls, I actually agree with you but I haven't seen it really proven.
- sumedh 9y ago> Can you provide sources that back up your claim with studies of inefficiency of technical analysis? Not the original guy but I just want to point out that Warren Buffett, Peter Lynch do not believe in technical analysis.
- lz400 9y agoWell they are obviously fundamental type of investors, and I have no doubts this type of investment is superior to pattern matching and chart gazing. But I see all those guys doing their pretty technical analysis charts in stocks and bitcoins and even though I think it's all BS, I wonder, is it? I mean, can you get a small edge? why would they be at it all day if it wasn't making them money?
- gnaritas 9y ago> I mean, can you get a small edge? why would they be at it all day if it wasn't making them money? It's gambling, they win randomly and falsely attribute the wins to tech analysis and dismiss all the losses as them "reading" it wrong. The random wins attribute to an addiction and superstition but they'd win just as much flipping a coin to decide whether to buy or sell. These people are very bad at math, if they were any good they'd be doing quantitative analysis and looking for actual patterns in the data that stand up to real scientific inquiry. Technical analysis is to quantitative analysis what alternative medicine is to actual medicine.