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Do TA proponents ever talk about the suggestions that the reason TA works is because of a feedback cycle? That is, if you get enough people with enough influen

by howeyc 12y ago

Do TA proponents ever talk about the suggestions that the reason TA works is because of a feedback cycle? That is, if you get enough people with enough influence (cash) all believing they can read tea leaves, and make similar movements based on that, it kinda works.

comboy 12y ago
> kinda works I think it does influence the market, but it cannot make them all profitable. Unless you think that group of TA believers act as a big pump and dump scheme (but I guess most markets are too big for that?)
- opendais 12y ago
  Penny stocks [as the OP trades] wouldn't be. He tries to obscure it a little with things like "pink sheets" and acronyms but I don't think that is intentional. I'm guessing people just don't read the original article he is defending.
  - comboy 12y ago
    I read it, but wasn't aware of the difference. Thanks for the link and explanation in another comment.
namecast 12y ago
This is discussed all the time - there's a running joke about how the 200 day moving average only works because everyone believes it does. That said, there are so many different TA techniques / indicators / gurus that, for all but the most well known TA indicators (there are easily hundreds!), there simply aren't enough people trading on the signals at the same time for the same securities with enough volume for there to be a proper feedback loop. If there was a repeatable, predictable feedback cycle, it follows that we'd all be charting it and trading off it (or backtesting with quant analysis to confirm the existence of the cycle, or having long conversations about nothing and convincing ourselves it was fundamental analysis, or whatever your preferred method of analysis is.)
fleitz 12y ago
Not only are you now a TA pro, but you can also trade real estate, and run the Federal Reserve. This is why the counter-cyclical guys only make money when the bubble bursts. (Berkshire always underperforms in the boom, but makes it up in spades in the bust)

by howeyc 12y ago

comboy 12y ago

> kinda works I think it does influence the market, but it cannot make them all profitable. Unless you think that group of TA believers act as a big pump and dump scheme (but I guess most markets are too big for that?)

opendais 12y ago
Penny stocks [as the OP trades] wouldn't be. He tries to obscure it a little with things like "pink sheets" and acronyms but I don't think that is intentional. I'm guessing people just don't read the original article he is defending.
- comboy 12y ago
  I read it, but wasn't aware of the difference. Thanks for the link and explanation in another comment.

namecast 12y ago

This is discussed all the time - there's a running joke about how the 200 day moving average only works because everyone believes it does. That said, there are so many different TA techniques / indicators / gurus that, for all but the most well known TA indicators (there are easily hundreds!), there simply aren't enough people trading on the signals at the same time for the same securities with enough volume for there to be a proper feedback loop. If there was a repeatable, predictable feedback cycle, it follows that we'd all be charting it and trading off it (or backtesting with quant analysis to confirm the existence of the cycle, or having long conversations about nothing and convincing ourselves it was fundamental analysis, or whatever your preferred method of analysis is.)

fleitz 12y ago

Not only are you now a TA pro, but you can also trade real estate, and run the Federal Reserve. This is why the counter-cyclical guys only make money when the bubble bursts. (Berkshire always underperforms in the boom, but makes it up in spades in the bust)