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Does non-technical analysis work for those events? Nope. TA can incorporate all currently known information about the likelihood of those events though. As they

Does non-technical analysis work for those events? Nope. TA can incorporate all currently known information about the likelihood of those events though. As they say on WSB, it's priced in.

vasco 3y ago
How does drawing a teacup on top of a chart incorporate "all currently known information" about anything whatsoever?
- JimtheCoder 3y ago
  Because you are not drawing a teacup, you are looking at price patterns. IF you believe in efficient markets, price should be an indicator of "all currently known information"
  - ivalm 3y ago
    If you believe in efficient market and things being priced in then there is no past price information that can affect future price as future price is entirely martingale. You can’t both believe in technical analysis and in market efficiency.
- 99_00 3y ago
  The collective knowledge and opinion is dynamically reflected in the price and volume chart.
- carabiner 3y ago
  Burgers' equation models traffic flow. Traffic comes from humans and humans behave in patterns. What difference does it make if it's a PDE or a teacup?
mywittyname 3y ago
You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Some things, like weather and major political issues are easily obtained bits of information and are high-impact events. Data like satellite imaging of fields are available at a price and will tell an awful lot about what best-case production figures will be like. Lastly, insider information is around too - asking companies what they planted, sales data on seeds/fertilizer, etc. If a disease is hitting one company, it's probably hitting a lot of them, especially true with live stock. People do pay for this information, and they use it to trade futures. Which is how it eventually gets "priced in." Forecasting is a huge factor in a successful agriculture business. Which is part of why a lot of niche industries tend towards vertical integration - it's much easier to forecast demand when you produce a lot of derivative products. Buy your own stuff; if you planted a surplus then create new products / markets, if there's a shortage, cut production on lower profit items.
- 99_00 3y ago
  >You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Experts predict crop failures, big money acts on those predictions and moves securities price and volume, which technical analysts examine. Therefore, the experts prediction is input for technical analysis.
  - mywittyname 3y ago
    It can be an input, but is it a significant input? If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Technical analysis is all about answering the question: are you able to filter who know something vs those that don't merely by looking at a buy signal? The answer: no, not really. Insiders acted well in advance of the SVB issues being made public, and there are lot of other examples of people making guaranteed bets that weren't obvious in the technicals. The noise is just too much. By the time the signal is clear, the market has "priced" it in, and now you're just trying to predict the random actions of the know-nothing crowd. Technicals are always after-the-fact. Since enough people with deep knowledge have to have already moved on that information in order for the market to have reacted to it. It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith.
    - 99_00 3y ago
      >If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Assuming you are the only person who knows for sure that this company will collapse, technical analysis is the wrong tool to use and all other strategies, experts, big money players will also fail. Assuming you aren't the only person who knows for sure that this company will collapse the price will reflect this knowledge. >It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith. It's nothing like that at all, and reasoning with analogy is pointless because the discussion becomes about the analogy not the issue at hand. But I will try. If people running away is people selling stock, it doesn't matter if there is a fire or not. Selling stock impacts price regardless of if the event is real or not. And as you know, having been in a building where the fire alarm was activated, people don't rush to the exists. Some small number leave right away. The vast majority won't enter the building. The remaining people look to others and as more leave the momentum builds until the mass moves out. And once the fire department arrives and gives the ok they will go back in. But since we are talking about stocks, not all buyers won't be waiting for that. They'll have put their money elsewhere, money may go back into the stock slowly. Obviously this won't work on the top 3 most popular stocks in a raging bull market that everyone is paying attention to. In that case, people will be waiting to jump back in.
Tuna-Fish 3y ago
Doing that is not technical analysis. Technical analysis is predicting stock prices strictly from the previous price history. The steel-man position for technical analysis is that humans are herd animals, who tend to do things in similar, predictable ways. Such as, people who pick stocks like to sell and take profits after the stock reaches some nice, round number. When enough people do this, it can result in repeatable, predictable patterns in prices. The massive caveat there is of course that while that might be true in the absence of outside stimuli, any news always trumps that. It doesn't matter how nice your patterns are, if it comes out that the company somehow did worse than expected, it's price is going to fall, and if it did better than expected, it's going to rise. Trading on technicals might be something that works if you are really fucking careful, but it seems to me like you are picking quarters in front of a steamroller, in a way. The actual reliable profits from technical analysis are always going to be small, and the risks of investing with no understanding of the fundamentals seems fraught.
- kenjackson 3y ago
  > Technical analysis is predicting stock prices strictly from the previous price history. Is this true? For example, is using AI models that take into price history, current and historical events, insider and/or institutional trading, analyst opinions -- would that not be considered technical analysis? I know this is just a matter of semantics, but curious as to what is considered TA nowadays.
  - AnotherGoodName 3y ago
    Not really. When you add that much information that gets into 'analysis' rather than 'technical analysis'. A bit like medicine vs traditional medicine. Technical analysis is specifically the stupid line drawings you see on stock charts that try to predict trend lines from the motion of the previous lines
    - kenjackson 3y ago
      That's helpful. OK, I'm in the "it's closer to astrology" camp then.

Does non-technical analysis work for those events? Nope. TA can incorporate all currently known information about the likelihood of those events though. As they say on WSB, it's priced in.

vasco 3y ago

How does drawing a teacup on top of a chart incorporate "all currently known information" about anything whatsoever?

JimtheCoder 3y ago
Because you are not drawing a teacup, you are looking at price patterns. IF you believe in efficient markets, price should be an indicator of "all currently known information"
- ivalm 3y ago
  If you believe in efficient market and things being priced in then there is no past price information that can affect future price as future price is entirely martingale. You can’t both believe in technical analysis and in market efficiency.
99_00 3y ago
The collective knowledge and opinion is dynamically reflected in the price and volume chart.
carabiner 3y ago
Burgers' equation models traffic flow. Traffic comes from humans and humans behave in patterns. What difference does it make if it's a PDE or a teacup?

mywittyname 3y ago

You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Some things, like weather and major political issues are easily obtained bits of information and are high-impact events. Data like satellite imaging of fields are available at a price and will tell an awful lot about what best-case production figures will be like. Lastly, insider information is around too - asking companies what they planted, sales data on seeds/fertilizer, etc. If a disease is hitting one company, it's probably hitting a lot of them, especially true with live stock. People do pay for this information, and they use it to trade futures. Which is how it eventually gets "priced in." Forecasting is a huge factor in a successful agriculture business. Which is part of why a lot of niche industries tend towards vertical integration - it's much easier to forecast demand when you produce a lot of derivative products. Buy your own stuff; if you planted a surplus then create new products / markets, if there's a shortage, cut production on lower profit items.

99_00 3y ago
>You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Experts predict crop failures, big money acts on those predictions and moves securities price and volume, which technical analysts examine. Therefore, the experts prediction is input for technical analysis.
- mywittyname 3y ago
  It can be an input, but is it a significant input? If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Technical analysis is all about answering the question: are you able to filter who know something vs those that don't merely by looking at a buy signal? The answer: no, not really. Insiders acted well in advance of the SVB issues being made public, and there are lot of other examples of people making guaranteed bets that weren't obvious in the technicals. The noise is just too much. By the time the signal is clear, the market has "priced" it in, and now you're just trying to predict the random actions of the know-nothing crowd. Technicals are always after-the-fact. Since enough people with deep knowledge have to have already moved on that information in order for the market to have reacted to it. It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith.
  - 99_00 3y ago
    >If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Assuming you are the only person who knows for sure that this company will collapse, technical analysis is the wrong tool to use and all other strategies, experts, big money players will also fail. Assuming you aren't the only person who knows for sure that this company will collapse the price will reflect this knowledge. >It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith. It's nothing like that at all, and reasoning with analogy is pointless because the discussion becomes about the analogy not the issue at hand. But I will try. If people running away is people selling stock, it doesn't matter if there is a fire or not. Selling stock impacts price regardless of if the event is real or not. And as you know, having been in a building where the fire alarm was activated, people don't rush to the exists. Some small number leave right away. The vast majority won't enter the building. The remaining people look to others and as more leave the momentum builds until the mass moves out. And once the fire department arrives and gives the ok they will go back in. But since we are talking about stocks, not all buyers won't be waiting for that. They'll have put their money elsewhere, money may go back into the stock slowly. Obviously this won't work on the top 3 most popular stocks in a raging bull market that everyone is paying attention to. In that case, people will be waiting to jump back in.

Tuna-Fish 3y ago

Doing that is not technical analysis. Technical analysis is predicting stock prices strictly from the previous price history. The steel-man position for technical analysis is that humans are herd animals, who tend to do things in similar, predictable ways. Such as, people who pick stocks like to sell and take profits after the stock reaches some nice, round number. When enough people do this, it can result in repeatable, predictable patterns in prices. The massive caveat there is of course that while that might be true in the absence of outside stimuli, any news always trumps that. It doesn't matter how nice your patterns are, if it comes out that the company somehow did worse than expected, it's price is going to fall, and if it did better than expected, it's going to rise. Trading on technicals might be something that works if you are really fucking careful, but it seems to me like you are picking quarters in front of a steamroller, in a way. The actual reliable profits from technical analysis are always going to be small, and the risks of investing with no understanding of the fundamentals seems fraught.

kenjackson 3y ago
> Technical analysis is predicting stock prices strictly from the previous price history. Is this true? For example, is using AI models that take into price history, current and historical events, insider and/or institutional trading, analyst opinions -- would that not be considered technical analysis? I know this is just a matter of semantics, but curious as to what is considered TA nowadays.
- AnotherGoodName 3y ago
  Not really. When you add that much information that gets into 'analysis' rather than 'technical analysis'. A bit like medicine vs traditional medicine. Technical analysis is specifically the stupid line drawings you see on stock charts that try to predict trend lines from the motion of the previous lines
  - kenjackson 3y ago
    That's helpful. OK, I'm in the "it's closer to astrology" camp then.