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Chart analysis is the financial equivalent of cargo-cult programming.

• dabeeeenster 16y ago
  What's strange is this. Considered logically, Chartism is total bollocks, yet the trading world sees it as generally legitimate. Traders are often split into those that buy into the concept and those that don't, but from my experience even those that don't buy into it do not see it as snake oil. It's more like "Oh, yeah, he's a chartist".
  • eru 16y ago
    Perhaps it's a self-fulfilling prophecy? If you believe that some lines are supporting the prices, you may want to sell or buy at those lines, thus re-inforcing those lines (or actually bringing them into being)? By the way, those analysts you see on TV or read in the magazines--no matter if chartist or not--can always explain every stock movement. With hindsight.
  • pasbesoin 16y ago
    So, one needs to consider the effects of chartism rather than its outright predictions? (I don't intend this entirely as a rhetorical question.)
• GiraffeNecktie 16y ago
  Some chart analysis is valuable when used with discretion. For example, moving averages and moving average crossovers can help clarify trends in the market. Using a 13 week and 34 week exponential moving average crossover gives useful (and conservative) buy and sell signals and will often keep you out of the shit. Being aware of divergences (eg. the market is going ballistic but volumes are rapidly getting weaker) can give you an alert that things are about to change. But yeah, a lot of TA - especially stuff like Elliot Waves - is probably worse than looking at chicken entrails.