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No. That comparison is an insult to astrology. While the made-up character is similar, Astrology is far richer in concepts, orchestration and story telling. T

No. That comparison is an insult to astrology. While the made-up character is similar, Astrology is far richer in concepts, orchestration and story telling. Technical analysis is the ultimate dumbification of market structure and dynamics, which in itself is a major dumbification of the formal economy, which in itself is a major simplification of the stuff-that-matters(TM). The objective of technical analysis is to get as many low-information actors as possible to transact with as low-cost as possible technology (I would totally not be surprised if current "technical analysis" verbiage is 100% automated).

thanatropism 3y ago
Astrology has more of a culturally evolved or emerged nature. Of course, it's peddled by entrepreneurs who have an incentive to "make it up". Yet it's oddly coherent (with itself), at least from the POV of an uninterested person who encounters it a few times over decades. Technical analysis is literally made up. I think there's a gradient where technical analysis is in the far right and psychonalysis in the far left, with astrology in the middle. I can't discern it clearly on an empty stomach right now though.
- ydnaclementine 3y ago
  If astrology isn't real, why does literally every Scorpio I know have their birth date in October or November? Checkmate atheists
  - foolswisdom 3y ago
    On the contrary, if it was real, wouldn't you expect every scorpio to be born in the _same_ month of the year instead of the same _two_?
    - btilly 3y ago
      Only if the calendar and zodiac agreed on the month boundaries. Sadly the actual zodiac and astrology do not agree on the month boundaries. And that is because astrologers are using an out of date calendar. https://www.astronomy.com/astronomy-for-beginners/why-your-zodiac-sign-is-probably-wrong/ https://www.astronomy.com/astronomy-for-beginners/why-your-z...
  - lo_zamoyski 3y ago
    Sorry, what does this have to do with (a)theism? The growing interest in astrology among the young correlates with their growing atheism. Also [0]. [0] https://www.newadvent.org/cathen/02018e.htm https://www.newadvent.org/cathen/02018e.htm
    - TFortunato 3y ago
      It's just a silly meme used when making a silly argument https://knowyourmeme.com/memes/checkmate-atheists https://knowyourmeme.com/memes/checkmate-atheists
    - epiccoleman 3y ago
      "checkmate, atheists!" is an old meme. I think it might have originated from this video (but maybe it predates it): https://youtu.be/P47OC439x88 https://youtu.be/P47OC439x88 I've only ever seen it used sarcastically by atheists making fun of the kinds of arguments that religious folks make. It was a bigger thing during the heyday of new atheism, I don't see a lot of discourse on the topic these days.
  - anigbrowl 3y ago
    >not using Chinese astrology where every person born in that year has the same characteristics ngmi
- trey-jones 3y ago
  Your going to have to define technical analysis for me. I'm questioning very heavily that we're talking about the same thing. You don't believe in trends?
cde-v 3y ago
Glad to see this is the top comment. It frustrates me to no end to see people lapping up TA like it is remotely useful when we spent our first semester on finance at university essentially disproving TA signals. It was literally Finance 102.
- deleted 3y ago
  [deleted]
- npsomaratna 3y ago
  Out of curiosity, what would you consider Finance 101?
  - patmorgan23 3y ago
    Time value of money, discount rates, etc
- Atlas22 3y ago
  If you expected to learn useful finance at a university, you already failed as soon as you applied. If anyone there knew what they were doing financially, they wouldnt be there, and especially not teaching Finance 102. In case you were not aware, nearly all professors hate teaching lower level classes, so they naturally get forced on the worst performing professors (the ones that are closest to getting fired). Concluding that the entirety of TA can not be useful (the Null hypothesis is true for all input signals) just from seeing that a few strawman TA in finance 102 not work is beyond absurd.
  - btilly 3y ago
    If some version of TA worked, then as soon as enough traders adopt that version of TA, it would stop working. That is not to say that no versions of TA will work. After all Long Term Capital made a fortune on reversion to the mean...right until they went bankrupt. (And then their portfolio went on to make a fortune again. Too bad they were insolvent.) But it will only continue to work if the trading strategy is not widely known, or comes with trading risks.
glitchc 3y ago
This feels unnaturally harsh and likely incorrect. You seem to be suggesting that statistical tools are useless at predicting trends in time-series data. If the assertion is true that this is useless for the stock market, that would imply the assertion is equally true for macro-economics, and extending further, climate change. We are collectively deciding how to spend trillions of dollars based on the outputs of these models. Should we not bother then?
- BaseballPhysics 3y ago
  > You seem to be suggesting that statistical tools are useless at predicting trends in time-series data. TA doesn't use "statistical tools" in any actually meaningful or predictive way. It's digital phrenology. Data-driven tea leaf reading. Programmatic palmistry. It deserves only scorn.
  - unyttigfjelltol 3y ago
    Textbook TA uses a lot of voodoo which, itself, is helpful for understanding market psychology. The fact that maybe 20% of market participants give significance to a simple moving average calculated from a certain number of days or weeks-- useful explanatory information! But the core proposition of TA is that a scientific approach to analyzing past price movements will at least hint at the future, sometimes. Not all the time. That's not controversial, and wouldn't be in any other discipline either. Whether it can be profitably exploited at a particular scale or by a particular person-- another question entirely. The interesting thing about applying TA to live markets is ... its adversarial. A pattern becomes known, and that leads it to change. If it doesn't change, we can consider it based in fundamentals. For example, markets are more volatile, on average, in the Fall. Why? Well, it's got to be fundamental because everyone knows this pattern and yet it very often repeats. TA is helpful because we would not identify the fundamental mechanism without first observing the historical cycles of prices.
    - codethief 3y ago
      You have phrased your comment very carefully and I agree, sometimes there might be some value in looking at simple trends, if only for the reason that other market participants do the same. > But the core proposition of TA is that a scientific approach to analyzing past price movements will at least hint at the future, sometimes. Not all the time. Will those "hints" be correct more than 50% of the time, though? I mean, if TA did beat coin flips, you could exploit this consistently with a profit. That, however, would be news to me.
dheera 3y ago
Technical analysis is an insult to technology and should be rebranded to "untechnical analysis". Technical people would do analysis with state-of-the-art tools, from LLMs applied on github repos to discover lurking security bugs likely to bring stocks crashing, to vision models applied to satellite images to analyze business activity.
- klabb3 3y ago
  Indeed. Why spend $10 doing something useless when you can spend $10000?
  - marcosdumay 3y ago
    It the GP is a joke, that's the joke. But I have to say, I'm not sure if it's a joke at all.
- wruza 3y ago
  A serious question now: if we take all the mainstream news articles (or headlines) for 20 years and correspond them to OHLC data with e.g. hour and day granularity timestamps, could some sort of AI make hourly or daily predictions? If modern AI can generate average-human-like text and images, couldn’t it day trade as well?
hammock 3y ago
>Technical analysis is the ultimate dumbification of market structure and dynamics Technical analysis is the macroeconomics (macroeconomics, the discipline taught in school etc) of the stock market! It’s like drawing aggregate demand and supply curves and imagining that they move around monolithically as they drive the economy. Tail wags the dog
- napoleon_thepig 3y ago
  I don't think you understand macroeconomics (or the undergrad level curves you're mentioning)
  - btilly 3y ago
    The "tail wags the dog" bit makes me think that the commenter understands both. And shares my distain for macroeconomics.
jboydyhacker 3y ago
The article there looks at ONE use of technical analysis which is a moving average crossover. The nicest houses I know are owned by traders who know how to use technical analysis. it is very interesting that such an uniformed opinion is the top rated comment on YC tho.
- highfrequency 3y ago
  Perhaps the worst houses are also owned by traders who use technical analysis ;)
  - hattmall 3y ago
    The worst houses are owned by landlords that rent them to poor people.
- fnovd 3y ago
  Lottery winners owning fancy houses should not be taken as an endorsement of their wealth acquisition strategy.
  - suaptpickle 3y ago
    I buy a lottery ticket for a dollar. I don't win; I'm out the dollar. I buy a stock for a dollar. It goes down 50% tomorrow. Then up 25% the next day and so on it fluctuates like a train going through the mountains. One point in time it is low and another point in time it is high. I prefer to leave the train when it is high on the mountain. i e. Picking a stock is a gamble but unlike the lottery I get to play the same game with the same money everyday until I win or die.
    - meheleventyone 3y ago
      Stocks can and do tank and get delisted or never regain the value at which you put in.
      - 3y ago
flappyeagle 3y ago
I don’t understand this isn’t high frequency trading 100% technical analysis?
- 3abiton 3y ago
  Algo trading is a hoax?
- _fizz_buzz_ 3y ago
  High frequency trading is front running.
  - yxhuvud 3y ago
    Front running is illegal, so no.
    - worik 3y ago
      > Front running is illegal, so no Yes Front running is illegal HFT is front running There are very good reasons to believe that. The earliest proponents of HFT may have made money by more efficiently using price information. But now there are so many of them that is no longer possible It is crime. The most useful model for understanding international high finance is "organized criminal networks"
      - chollida1 3y ago
        You are confidently incorrect. Front running is when you take an order from a client and before executing it out your own order in first so you benefit from the bumpe or drop in stock price that the client would cause. The key here is you have advanced knowledge of the order before it hits the market and you have a legal requirement to execute client orders before your own. I believe it’s also been ruled to be front running if you get knowledge of the client order in advance of it being sent to the market by a third party. But having a faster network and computer to allow you to react faster than others is not front running. Take this is an extreme, if I watch a market ticket and react manually with in 20 minutes to news and you read about the news in the paper the next day, did I front run you by trading before you? It’s the duty to execute a client order before your own and not tell others abouT the order before it hits the market that is the requirement for front running.
DontchaKnowit 3y ago
Ah this is silly. Technical analysis hmis grounded in sone level of useful information and technique. But it is ultimately a game of informed guessing, so in that respect, its a bit like astrology
amelius 3y ago
The entire idea behind technical analysis is that it's a self-fulfilling prophecy. The more people believe in a certain rule, the more that rule turns out to be true. It might work that way with astrology too, but it's not so clear.
- raincole 3y ago
  Astrology would be a self-fulfilling prophecy if enough people took it seriously. For example if everyone agreed on that Gemini means good at science and Leo is good at art, the whole education system would be designed around this belief and it would hugely impact how children think of their own potential.
  - azalemeth 3y ago
    There's a very good episode of The Orville essentially based on this premise in disguise and it goes as horribly wrong as you think it would. Humans would totally do this. If anything, I'm pleased by the fact that we don't do it quite as much as we could...
  - lisper 3y ago
    I wrote a blog post about exactly this about three years ago: https://blog.rongarret.info/2020/09/can-facts-be-racist.html https://blog.rongarret.info/2020/09/can-facts-be-racist.html
  - antognini 3y ago
    There is a good example of this in Ancient Rome. By around the time of Augustus Romans were fervent believers in astrology. One of the most notable cases of astrology becoming a self-fulfilling prophecy has to do with the death of the emperor Domitian. An astrologer named Asclation had earlier predicted that Domitian would die on September 18, 96 AD, and Domitian's enemies used this as a sort of nucleation point to organize his assassination. So although the date was made up, it had the effect of focusing the efforts of the assassins on a particular date, and they were successful in assassinating him on September 18. The full story that survives probably has some embellishments, but is entertaining. As the day approached Domitian became increasingly nervous. On September 17, he called Asclation before him and asked him if he stood by his prediction. Asclation said he did. Domitian then asked Asclation how Ascaltion himself was to die. Asclation responded that the stars said that he would die by being torn apart by dogs. Domitian then had an idea, and condemned him to death by burning. Asclation was immediately led to a public square, tied to a stake, and a bonfire was built underneath him. Not long after being lit, however, it suddenly began raining and the downpour quenched the flames. In the wet mess, Asclation's stake tipped over and a pack of dogs found him and devoured him. This development naturally did not put Domitian's mind at ease. The next day he became a nervous wreck. Around noon, he asked an attendant what time it was. The attendant, who was part of the conspiracy, lied and said that it was an hour later. Seeing that the danger had passed, Domitian relaxed and decided to take a bath. As he was about to go out, an official rushed in and asked for his signature on some documents. The official appeared to have an injury to his arm, but this official was also in on the conspiracy, and his sling concealed a dagger. When he got close to the emperor he stabbed him to death.
amerkhalid 3y ago
Didn't Renaissance Technologies made all their money from technical analysis? Who cares if it is simplification of something, if your goal is to make money, not understand it.
- dogmayor 3y ago
  No, they were/are running a far more sophisticated shop. Certainly not solely tech analysis techniques. Read "The Man Who Solved the Market" by Gregory Zuckerman. Here's a review: https://www.nytimes.com/2019/11/13/books/review/the-man-who-solved-the-market-gregory-zuckerman.html https://www.nytimes.com/2019/11/13/books/review/the-man-who-...
- nologic01 3y ago
  TA means something very specific, its not a proxy for all quantitative analysis. Actors with privileged access to information and superior execution capabilities may from time to time "beat the market". The rest are noise traders that are just being systematically fleeced.
- sidlls 3y ago
  They’ve made their money through a combination of information asymmetry and gray-area or outright illegal practices (e.g. tax shenanigans). Their returns are literally unbelievable if they are operating within the bounds of regulations.
Scubabear68 3y ago
Yes, the glut of websites with stock “analysis” or “news” is almost 100% automated based on a number of financial and technical measures of any given stock. They are, as you say, pretty much worthless.
manojlds 3y ago
I would think some basic TA is good for investing. Which is what the TFA is concluding I thought?
- grepfru_it 3y ago
  Yes. Although you should never trade on TA alone, it should be a signal that you trade based on your risk analysis of the situation. TA of index etfs today is saying a buy or sell signal is imminent but risk is still weighted to the downside so I’m staying conservative until the market makes a decision. That said back in 2018 there were no less than 3 cup and handle indicators on SPY at almost every timeframe. I yolo’d the biggest gain ever because the TA was saying heavy buy and the risk was very low (bought long dated ITM calls with a strict exit date)
mikkom 3y ago
Well you have to first define what is "technical analysis" and be quite clear with what you mean.. There are lots of giant trend following and quant funds that will likely fall into "technical analysis" category.
kamaal 3y ago
>>Technical analysis is the ultimate dumbification of market structure and dynamics, which in itself is a major dumbification of the formal economy, which in itself is a major simplification of the stuff-that-matters(TM). So basically Python is ultimate dumbification of C, which in itself is a major dumbification of Assembly, which in itself is a major simplification of Gates/Transistors? At some point we have to deal with abstractions in one way or the other or just continue to indulge in mental verbosity of the most extreme kind. Abstractions could be leaky but they work for the most part. Which is good enough for most situations.
- nologic01 3y ago
  > Abstractions could be leaky but they work for the most part. Your abstraction of abstractions is leaky and is not working. Technical analysis is not an abstraction of market behavior. It the fetichization of linear 2d representations of historical price timeseries. In your analogy it would be to look at pictures of chips, identify faces and other objects in the clusters of transistors and argue that is the interaction of these patterns that determines chip function.

thanatropism 3y ago

Astrology has more of a culturally evolved or emerged nature. Of course, it's peddled by entrepreneurs who have an incentive to "make it up". Yet it's oddly coherent (with itself), at least from the POV of an uninterested person who encounters it a few times over decades. Technical analysis is literally made up. I think there's a gradient where technical analysis is in the far right and psychonalysis in the far left, with astrology in the middle. I can't discern it clearly on an empty stomach right now though.

ydnaclementine 3y ago
If astrology isn't real, why does literally every Scorpio I know have their birth date in October or November? Checkmate atheists
- foolswisdom 3y ago
  On the contrary, if it was real, wouldn't you expect every scorpio to be born in the _same_ month of the year instead of the same _two_?
  - btilly 3y ago
    Only if the calendar and zodiac agreed on the month boundaries. Sadly the actual zodiac and astrology do not agree on the month boundaries. And that is because astrologers are using an out of date calendar. https://www.astronomy.com/astronomy-for-beginners/why-your-zodiac-sign-is-probably-wrong/ https://www.astronomy.com/astronomy-for-beginners/why-your-z...
- lo_zamoyski 3y ago
  Sorry, what does this have to do with (a)theism? The growing interest in astrology among the young correlates with their growing atheism. Also [0]. [0] https://www.newadvent.org/cathen/02018e.htm https://www.newadvent.org/cathen/02018e.htm
  - TFortunato 3y ago
    It's just a silly meme used when making a silly argument https://knowyourmeme.com/memes/checkmate-atheists https://knowyourmeme.com/memes/checkmate-atheists
  - epiccoleman 3y ago
    "checkmate, atheists!" is an old meme. I think it might have originated from this video (but maybe it predates it): https://youtu.be/P47OC439x88 https://youtu.be/P47OC439x88 I've only ever seen it used sarcastically by atheists making fun of the kinds of arguments that religious folks make. It was a bigger thing during the heyday of new atheism, I don't see a lot of discourse on the topic these days.
- anigbrowl 3y ago
  >not using Chinese astrology where every person born in that year has the same characteristics ngmi
trey-jones 3y ago
Your going to have to define technical analysis for me. I'm questioning very heavily that we're talking about the same thing. You don't believe in trends?

cde-v 3y ago

Glad to see this is the top comment. It frustrates me to no end to see people lapping up TA like it is remotely useful when we spent our first semester on finance at university essentially disproving TA signals. It was literally Finance 102.

deleted 3y ago
[deleted]
npsomaratna 3y ago
Out of curiosity, what would you consider Finance 101?
- patmorgan23 3y ago
  Time value of money, discount rates, etc
Atlas22 3y ago
If you expected to learn useful finance at a university, you already failed as soon as you applied. If anyone there knew what they were doing financially, they wouldnt be there, and especially not teaching Finance 102. In case you were not aware, nearly all professors hate teaching lower level classes, so they naturally get forced on the worst performing professors (the ones that are closest to getting fired). Concluding that the entirety of TA can not be useful (the Null hypothesis is true for all input signals) just from seeing that a few strawman TA in finance 102 not work is beyond absurd.
- btilly 3y ago
  If some version of TA worked, then as soon as enough traders adopt that version of TA, it would stop working. That is not to say that no versions of TA will work. After all Long Term Capital made a fortune on reversion to the mean...right until they went bankrupt. (And then their portfolio went on to make a fortune again. Too bad they were insolvent.) But it will only continue to work if the trading strategy is not widely known, or comes with trading risks.

glitchc 3y ago

This feels unnaturally harsh and likely incorrect. You seem to be suggesting that statistical tools are useless at predicting trends in time-series data. If the assertion is true that this is useless for the stock market, that would imply the assertion is equally true for macro-economics, and extending further, climate change. We are collectively deciding how to spend trillions of dollars based on the outputs of these models. Should we not bother then?

BaseballPhysics 3y ago
> You seem to be suggesting that statistical tools are useless at predicting trends in time-series data. TA doesn't use "statistical tools" in any actually meaningful or predictive way. It's digital phrenology. Data-driven tea leaf reading. Programmatic palmistry. It deserves only scorn.
- unyttigfjelltol 3y ago
  Textbook TA uses a lot of voodoo which, itself, is helpful for understanding market psychology. The fact that maybe 20% of market participants give significance to a simple moving average calculated from a certain number of days or weeks-- useful explanatory information! But the core proposition of TA is that a scientific approach to analyzing past price movements will at least hint at the future, sometimes. Not all the time. That's not controversial, and wouldn't be in any other discipline either. Whether it can be profitably exploited at a particular scale or by a particular person-- another question entirely. The interesting thing about applying TA to live markets is ... its adversarial. A pattern becomes known, and that leads it to change. If it doesn't change, we can consider it based in fundamentals. For example, markets are more volatile, on average, in the Fall. Why? Well, it's got to be fundamental because everyone knows this pattern and yet it very often repeats. TA is helpful because we would not identify the fundamental mechanism without first observing the historical cycles of prices.
  - codethief 3y ago
    You have phrased your comment very carefully and I agree, sometimes there might be some value in looking at simple trends, if only for the reason that other market participants do the same. > But the core proposition of TA is that a scientific approach to analyzing past price movements will at least hint at the future, sometimes. Not all the time. Will those "hints" be correct more than 50% of the time, though? I mean, if TA did beat coin flips, you could exploit this consistently with a profit. That, however, would be news to me.

dheera 3y ago

Technical analysis is an insult to technology and should be rebranded to "untechnical analysis". Technical people would do analysis with state-of-the-art tools, from LLMs applied on github repos to discover lurking security bugs likely to bring stocks crashing, to vision models applied to satellite images to analyze business activity.

klabb3 3y ago
Indeed. Why spend $10 doing something useless when you can spend $10000?
- marcosdumay 3y ago
  It the GP is a joke, that's the joke. But I have to say, I'm not sure if it's a joke at all.
wruza 3y ago
A serious question now: if we take all the mainstream news articles (or headlines) for 20 years and correspond them to OHLC data with e.g. hour and day granularity timestamps, could some sort of AI make hourly or daily predictions? If modern AI can generate average-human-like text and images, couldn’t it day trade as well?

hammock 3y ago

>Technical analysis is the ultimate dumbification of market structure and dynamics Technical analysis is the macroeconomics (macroeconomics, the discipline taught in school etc) of the stock market! It’s like drawing aggregate demand and supply curves and imagining that they move around monolithically as they drive the economy. Tail wags the dog

napoleon_thepig 3y ago
I don't think you understand macroeconomics (or the undergrad level curves you're mentioning)
- btilly 3y ago
  The "tail wags the dog" bit makes me think that the commenter understands both. And shares my distain for macroeconomics.

jboydyhacker 3y ago

The article there looks at ONE use of technical analysis which is a moving average crossover. The nicest houses I know are owned by traders who know how to use technical analysis. it is very interesting that such an uniformed opinion is the top rated comment on YC tho.

highfrequency 3y ago
Perhaps the worst houses are also owned by traders who use technical analysis ;)
- hattmall 3y ago
  The worst houses are owned by landlords that rent them to poor people.
fnovd 3y ago
Lottery winners owning fancy houses should not be taken as an endorsement of their wealth acquisition strategy.
- suaptpickle 3y ago
  I buy a lottery ticket for a dollar. I don't win; I'm out the dollar. I buy a stock for a dollar. It goes down 50% tomorrow. Then up 25% the next day and so on it fluctuates like a train going through the mountains. One point in time it is low and another point in time it is high. I prefer to leave the train when it is high on the mountain. i e. Picking a stock is a gamble but unlike the lottery I get to play the same game with the same money everyday until I win or die.
  - meheleventyone 3y ago
    Stocks can and do tank and get delisted or never regain the value at which you put in.
    - 3y ago

flappyeagle 3y ago

I don’t understand this isn’t high frequency trading 100% technical analysis?

3abiton 3y ago
Algo trading is a hoax?
_fizz_buzz_ 3y ago
High frequency trading is front running.
- yxhuvud 3y ago
  Front running is illegal, so no.
  - worik 3y ago
    > Front running is illegal, so no Yes Front running is illegal HFT is front running There are very good reasons to believe that. The earliest proponents of HFT may have made money by more efficiently using price information. But now there are so many of them that is no longer possible It is crime. The most useful model for understanding international high finance is "organized criminal networks"
    - chollida1 3y ago
      You are confidently incorrect. Front running is when you take an order from a client and before executing it out your own order in first so you benefit from the bumpe or drop in stock price that the client would cause. The key here is you have advanced knowledge of the order before it hits the market and you have a legal requirement to execute client orders before your own. I believe it’s also been ruled to be front running if you get knowledge of the client order in advance of it being sent to the market by a third party. But having a faster network and computer to allow you to react faster than others is not front running. Take this is an extreme, if I watch a market ticket and react manually with in 20 minutes to news and you read about the news in the paper the next day, did I front run you by trading before you? It’s the duty to execute a client order before your own and not tell others abouT the order before it hits the market that is the requirement for front running.

DontchaKnowit 3y ago

Ah this is silly. Technical analysis hmis grounded in sone level of useful information and technique. But it is ultimately a game of informed guessing, so in that respect, its a bit like astrology

amelius 3y ago

The entire idea behind technical analysis is that it's a self-fulfilling prophecy. The more people believe in a certain rule, the more that rule turns out to be true. It might work that way with astrology too, but it's not so clear.

raincole 3y ago
Astrology would be a self-fulfilling prophecy if enough people took it seriously. For example if everyone agreed on that Gemini means good at science and Leo is good at art, the whole education system would be designed around this belief and it would hugely impact how children think of their own potential.
- azalemeth 3y ago
  There's a very good episode of The Orville essentially based on this premise in disguise and it goes as horribly wrong as you think it would. Humans would totally do this. If anything, I'm pleased by the fact that we don't do it quite as much as we could...
- lisper 3y ago
  I wrote a blog post about exactly this about three years ago: https://blog.rongarret.info/2020/09/can-facts-be-racist.html https://blog.rongarret.info/2020/09/can-facts-be-racist.html
- antognini 3y ago
  There is a good example of this in Ancient Rome. By around the time of Augustus Romans were fervent believers in astrology. One of the most notable cases of astrology becoming a self-fulfilling prophecy has to do with the death of the emperor Domitian. An astrologer named Asclation had earlier predicted that Domitian would die on September 18, 96 AD, and Domitian's enemies used this as a sort of nucleation point to organize his assassination. So although the date was made up, it had the effect of focusing the efforts of the assassins on a particular date, and they were successful in assassinating him on September 18. The full story that survives probably has some embellishments, but is entertaining. As the day approached Domitian became increasingly nervous. On September 17, he called Asclation before him and asked him if he stood by his prediction. Asclation said he did. Domitian then asked Asclation how Ascaltion himself was to die. Asclation responded that the stars said that he would die by being torn apart by dogs. Domitian then had an idea, and condemned him to death by burning. Asclation was immediately led to a public square, tied to a stake, and a bonfire was built underneath him. Not long after being lit, however, it suddenly began raining and the downpour quenched the flames. In the wet mess, Asclation's stake tipped over and a pack of dogs found him and devoured him. This development naturally did not put Domitian's mind at ease. The next day he became a nervous wreck. Around noon, he asked an attendant what time it was. The attendant, who was part of the conspiracy, lied and said that it was an hour later. Seeing that the danger had passed, Domitian relaxed and decided to take a bath. As he was about to go out, an official rushed in and asked for his signature on some documents. The official appeared to have an injury to his arm, but this official was also in on the conspiracy, and his sling concealed a dagger. When he got close to the emperor he stabbed him to death.

amerkhalid 3y ago

Didn't Renaissance Technologies made all their money from technical analysis? Who cares if it is simplification of something, if your goal is to make money, not understand it.

dogmayor 3y ago
No, they were/are running a far more sophisticated shop. Certainly not solely tech analysis techniques. Read "The Man Who Solved the Market" by Gregory Zuckerman. Here's a review: https://www.nytimes.com/2019/11/13/books/review/the-man-who-solved-the-market-gregory-zuckerman.html https://www.nytimes.com/2019/11/13/books/review/the-man-who-...
nologic01 3y ago
TA means something very specific, its not a proxy for all quantitative analysis. Actors with privileged access to information and superior execution capabilities may from time to time "beat the market". The rest are noise traders that are just being systematically fleeced.
sidlls 3y ago
They’ve made their money through a combination of information asymmetry and gray-area or outright illegal practices (e.g. tax shenanigans). Their returns are literally unbelievable if they are operating within the bounds of regulations.

Scubabear68 3y ago

Yes, the glut of websites with stock “analysis” or “news” is almost 100% automated based on a number of financial and technical measures of any given stock. They are, as you say, pretty much worthless.

manojlds 3y ago

I would think some basic TA is good for investing. Which is what the TFA is concluding I thought?

grepfru_it 3y ago
Yes. Although you should never trade on TA alone, it should be a signal that you trade based on your risk analysis of the situation. TA of index etfs today is saying a buy or sell signal is imminent but risk is still weighted to the downside so I’m staying conservative until the market makes a decision. That said back in 2018 there were no less than 3 cup and handle indicators on SPY at almost every timeframe. I yolo’d the biggest gain ever because the TA was saying heavy buy and the risk was very low (bought long dated ITM calls with a strict exit date)

mikkom 3y ago

Well you have to first define what is "technical analysis" and be quite clear with what you mean.. There are lots of giant trend following and quant funds that will likely fall into "technical analysis" category.

kamaal 3y ago

>>Technical analysis is the ultimate dumbification of market structure and dynamics, which in itself is a major dumbification of the formal economy, which in itself is a major simplification of the stuff-that-matters(TM). So basically Python is ultimate dumbification of C, which in itself is a major dumbification of Assembly, which in itself is a major simplification of Gates/Transistors? At some point we have to deal with abstractions in one way or the other or just continue to indulge in mental verbosity of the most extreme kind. Abstractions could be leaky but they work for the most part. Which is good enough for most situations.

nologic01 3y ago
> Abstractions could be leaky but they work for the most part. Your abstraction of abstractions is leaky and is not working. Technical analysis is not an abstraction of market behavior. It the fetichization of linear 2d representations of historical price timeseries. In your analogy it would be to look at pictures of chips, identify faces and other objects in the clusters of transistors and argue that is the interaction of these patterns that determines chip function.