3 ms·

Does Technical Analysis really Work?

3 points by easonyan 2y ago

easonyan 2y ago
I've recently become a bit obsessed with technical analysis. I even made the prediction tool to improve my trading skills. (https://guessupdown.com https://guessupdown.com) However I honestly don't know if I'm on the right track. Since I really lost a lot of money on stock market,(40k usd,damn!) Or should I just fucking stay away from the stock market?
- PaulHoule 2y ago
  I think your $40k USD loss answers your question. Stick to index funds. If I was willing to lose that much money I would do something cool like start my own fashion brand or something. If you want to understand how some people make money trading stocks, see https://www.sciencedirect.com/science/article/pii/S0304405X98000312 https://www.sciencedirect.com/science/article/pii/S0304405X9... (obsolete because HFTs are doing something similar) Look at algorithms used in "automatic market making". Also this book https://www.amazon.com/Trading-Sentiment-Power-Markets-Finance/dp/1119122767 https://www.amazon.com/Trading-Sentiment-Power-Markets-Finan... is by some people who did something a lot of us thought about circa 2010 but they really did it and succeeded. Also https://www.amazon.com/Hedge-Funds-Perspective-Financial-Engineering/dp/0691145989 https://www.amazon.com/Hedge-Funds-Perspective-Financial-Eng... Like the first article the last book describes a strategy which has long burned out but if you are making money by quant trading today it's because you discovered a strategy like that which hasn't burned out yet. Personally when I look at charts I see levels of support and trends (doesn't there have to be someone who thinks that $40 is a bargain and buys heavily when it dips below that?) but the literature doesn't support it. On the other hand I don't believe in the occult but I am still really good at Ouija boards, talking to fox spirits and stuff like that. I never took "head and shoulders" and other patterns like that seriously.
cjbenedikt 2y ago
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8345893/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8345893/ "Empirical results show that the two-day candlestick patterns after filtering have the best prediction effect when forecasting one day ahead; these patterns obtain an average annual return, an annual Sharpe ratio, and an information ratio as high as 36.73%, 0.81, and 2.37, respectively."
- easonyan 2y ago
  so you also believe in technical analysis? do these indicators even help you earn money before?

3 points by easonyan 2y ago

I've recently become a bit obsessed with technical analysis. I even made the prediction tool to improve my trading skills. (https://guessupdown.com https://guessupdown.com) However I honestly don't know if I'm on the right track. Since I really lost a lot of money on stock market,(40k usd,damn!) Or should I just fucking stay away from the stock market?

PaulHoule 2y ago
I think your $40k USD loss answers your question. Stick to index funds. If I was willing to lose that much money I would do something cool like start my own fashion brand or something. If you want to understand how some people make money trading stocks, see https://www.sciencedirect.com/science/article/pii/S0304405X98000312 https://www.sciencedirect.com/science/article/pii/S0304405X9... (obsolete because HFTs are doing something similar) Look at algorithms used in "automatic market making". Also this book https://www.amazon.com/Trading-Sentiment-Power-Markets-Finance/dp/1119122767 https://www.amazon.com/Trading-Sentiment-Power-Markets-Finan... is by some people who did something a lot of us thought about circa 2010 but they really did it and succeeded. Also https://www.amazon.com/Hedge-Funds-Perspective-Financial-Engineering/dp/0691145989 https://www.amazon.com/Hedge-Funds-Perspective-Financial-Eng... Like the first article the last book describes a strategy which has long burned out but if you are making money by quant trading today it's because you discovered a strategy like that which hasn't burned out yet. Personally when I look at charts I see levels of support and trends (doesn't there have to be someone who thinks that $40 is a bargain and buys heavily when it dips below that?) but the literature doesn't support it. On the other hand I don't believe in the occult but I am still really good at Ouija boards, talking to fox spirits and stuff like that. I never took "head and shoulders" and other patterns like that seriously.

cjbenedikt 2y ago

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8345893/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8345893/ "Empirical results show that the two-day candlestick patterns after filtering have the best prediction effect when forecasting one day ahead; these patterns obtain an average annual return, an annual Sharpe ratio, and an information ratio as high as 36.73%, 0.81, and 2.37, respectively."

easonyan 2y ago
so you also believe in technical analysis? do these indicators even help you earn money before?