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Having taught technical analysis for years in many countries, I have debated the pros and cons of the subject exhaustively. There are numerous popular misconceptions and I can state quite catagorically that I have never heard a proper, well reasoned argument for dissmissing technical analysis. People who criticise it rarely, if ever bother to find out what it is all about. The press sometimes mentions technical analysis but usually in a way that suggests they are embarrassed by it or to provoke ridicule. It will occasionally provide an excuse for a market move when no story or logical explanation is available. This relegation to information of last resort is an error. When you hear or read the term "Technical Factors move xyz stock or financial market" it is because there is no story. What they are saying is nonsensical and without logical foundations. It is this type of miss-application that gives technical analysis a bad name. A vast improvement in knowledge and attitude has occurred in the last few years in the UK, but there is still progress to be made.
In the USA, they are way ahead in this field having already accepted technical trading as standard mainstream practice. My hope is that this attitude will be adopted globally. You are just as likely to see a technical trader on financial TV as an economist.
From a general point of view, there are great technical traders and ones who I fervently disagree with. The same applies to fundamental analysis and subjective economic views. This is to be expected and is infact healthly to a normal functioning market. This does not mean we can say "All technical analysis is bad " and/or " all economic analysis is bad" simply because an indvidual's view has been proved wrong.
People who criticise technical analysis usually do not want to hear the realities of the financial markets and do so out of fear i.e. what you have learnt throughout your education is likely to work against you when it comes to trading. Many times people have wondered how it is possible to predict financial market movements without the conventional sources of information. But the end of the course it almost seems so obvious. That is why I have no interest in anyone else’s opinion of a market other than my own. I simply do not care for the reasons attached to market moves-only for reliable techniques based on sound principles.
The biggest reward comes from people making money and their realisation about how markets really work. The satisfaction I derive from teaching comes from these two factors. I also get to meet some great people.
Economics, it is an interesting subject, but that’s as far as its usefulness goes in its text book application to tading. Many economic assumptions are just plain incorrect and without logical foundations. I could list a number here, but won’t for the sake of brevity. More often than not so called "fundamental information" are just stories that feed the general market’s desire to know why an instrument has moved to where it is now, rather than providing an indictation as to where it is going to go next. This leads to many academics’ consistent bewilderment at market moves and is probably a big factor in why they don’t trade.
It is important to note here that despite these statements, there are some great fundamental traders out there. However, I can guarantee that they will be applying the subject with their own non-standard interpretations, which you will be unable to get from an economic textbook or from the most popular financial information sources.
The financial press and newswires will only ever be interested in breaking headlines and good stories (who can blame them that’s what sells papers after all). Trading off this information can be financial suicide. The true facts of why market movements occur are anticipated by the few for when it becomes obvious to the many. Hence my insistence that successful trading comes from not following any crowd.
<| Introduction | |
FAQ | |
Learning | |
Experiences | |
Attitudes | |
Case Study |
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