I was talking with a friend recently who was telling me about his system where he does all sorts of technical analysis on a stock in order to predict the price. he uses all sorts of methods with names i cant even remember. He was talking about retracement levels, and fibonacci levels, and tried to make it sound scientific.
I have read the same things on this forum. I wonder how many people realize....that even after doing all that....all they are actually still only doing is guessing
All technical analysis is based on the old perfect market principle, and of it being an efficient finder of prices.
The theory was that at all prices, the ratio of buyers and sellers in the market will determine the real price of a product, and the price will move accordingly. And that the market has complete and 100% knowledge of all possible events and through this price finding mechanism will factor it in.
Technical analysis started simple. people would look at the charts and try and figure out where a stock was trending generally. Was it going up? was it going down? in a general trend.
Then as there was more money to be made, people started trying and coming up with more and more complicated ways and terms and tests to try and predict a movement in the market.
They try and apply fibonacci retracement levels, why....because fibonacci numbers are found in many places in nature. .... so? what does that have to do with markets? why should that be important?
Ive seen people looking at charts that are years old, and trying to draw lines all over the place. how is any news that is more than a year old that relevant? things change so fast in todays world...how can you use something from a year ago to predict?
To a degree, i can understand support and resistance points. If people were hesitant to overvalue or undervalue a stock beyond a certain point in the recent past, then its a good reason to hesistate to overvalue or undervalue it again.
if you read some of the texts written by some of the great traders that the world has seen, they never used technical analysis. They realize that the world changes by the day. new correlations are found, old correlations are removed. The past is relevant, but the present even more so. The future is always uncertain. if you are going to gamble, it is always better to gamble on a company rather than a chart.
Just because you want to give a name like "technical analysis"....doesnt make it either scientific or a reliable predictor of the future. You can throw around names of fancy systems, you can use the number of petals in a flower to predict the movement of a stock (which is what the fibonacci numbers are....flower petals are always in fibonacci numbers ) ....
but how is this different from tantrics who cut open an animal to predict the future?
We are all gambling on the stock market. Lets not forget it.....at the end of the day, its all speculation.
I have read the same things on this forum. I wonder how many people realize....that even after doing all that....all they are actually still only doing is guessing
All technical analysis is based on the old perfect market principle, and of it being an efficient finder of prices.
The theory was that at all prices, the ratio of buyers and sellers in the market will determine the real price of a product, and the price will move accordingly. And that the market has complete and 100% knowledge of all possible events and through this price finding mechanism will factor it in.
Technical analysis started simple. people would look at the charts and try and figure out where a stock was trending generally. Was it going up? was it going down? in a general trend.
Then as there was more money to be made, people started trying and coming up with more and more complicated ways and terms and tests to try and predict a movement in the market.
They try and apply fibonacci retracement levels, why....because fibonacci numbers are found in many places in nature. .... so? what does that have to do with markets? why should that be important?
Ive seen people looking at charts that are years old, and trying to draw lines all over the place. how is any news that is more than a year old that relevant? things change so fast in todays world...how can you use something from a year ago to predict?
To a degree, i can understand support and resistance points. If people were hesitant to overvalue or undervalue a stock beyond a certain point in the recent past, then its a good reason to hesistate to overvalue or undervalue it again.
if you read some of the texts written by some of the great traders that the world has seen, they never used technical analysis. They realize that the world changes by the day. new correlations are found, old correlations are removed. The past is relevant, but the present even more so. The future is always uncertain. if you are going to gamble, it is always better to gamble on a company rather than a chart.
Just because you want to give a name like "technical analysis"....doesnt make it either scientific or a reliable predictor of the future. You can throw around names of fancy systems, you can use the number of petals in a flower to predict the movement of a stock (which is what the fibonacci numbers are....flower petals are always in fibonacci numbers ) ....
but how is this different from tantrics who cut open an animal to predict the future?
We are all gambling on the stock market. Lets not forget it.....at the end of the day, its all speculation.