# Technical Analysis: Useless?



## Profiteer (27 February 2010)

This study by Ben R. Marshall (economics professor) and Jared Cahan (Macquarie Bank, Risk Management Group) is the latest suggesting that technical analysis provides little value to traders and investors.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181367

There is also a book on application of scientific methods to determine the true effectiveness of technical trading signals and found them useless.

http://www.amazon.com/Evidence-Base...stical/dp/0470008741/ref=cm_cr_pr_product_top

What do you think of technical strategies? Unfortunately, saying "they work for me" isn't proof that they do work, it might be proof you got lucky.

Lets try not to get personal


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## Trembling Hand (27 February 2010)

Profiteer said:


> is the latest suggesting that technical analysis provides little value to traders and investors.





Yes agreed completely useless as a "tool" for prediction. The problem though is that traders, real ones that last, don't use it for that. Which is why these academics are wasting their time.

But this argument is as old as the hills. Three camps - 

1 - its BS which the fundies, Academics and other fools who cannot do believe.

2 - it works, which the snake oils salesman, educators, delusional newbies & those with personal issues that have to be right fall into

3. Those that just use it for framing risk and reward.

Boring.


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## Synergy (27 February 2010)

Is this a random pattern?

I guess that's the question....


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## motorway (27 February 2010)

A lot of these studies never consider the need for a robust definition of TREND

And then the necessity of the taking actions in harmony with that trend as defined...
Then looking at possibility of defining trend on / at a PRIMARY scale
and using a higher resolution to trigger entry and exits

IN a TREND all PATTERNS are CONTINUATIONS
All SIGNALS are ( in the end ) entries ( with trend ) of different attractiveness 

Most of these Studies define a BUY or SELL signal
and act on it regardless of any definition or concept of TREND..

==>Buying all the way DOWN
or selling all the way UP 

Two Important Words 
TREND &
HARMONY


Motorway


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## Profiteer (27 February 2010)

Dr Victor Niederhoffer (Ph.D. in statistics) was the undisputed number 1 hedge fund manager in the world. He went bankrupt using technical analysis.

Are you better than Dr Victor Niederhoffer?


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## IFocus (27 February 2010)

Profiteer said:


> Dr Victor Niederhoffer (Ph.D. in statistics) was the undisputed number 1 hedge fund manager in the world. He went bankrupt using technical analysis.
> 
> Are you better than Dr Victor Niederhoffer?




I know he traded in an illiquid currency market and got smashed which means he didn't a very basic risk problem which takes it back to TH's comments.


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## tech/a (27 February 2010)

> He went bankrupt using technical analysis.




Professors in anything wont make you a successful business person.

In fact many professionals fail miserably in business and trading alike as they "Need" to be right and tend to be rigid their views.
The ability to adapt is lost.

I have my own view on the topic.

Actually we all see the same thing in analysis.

An anticipation of something to happen or not to happen.
It makes no difference what you use to analyse a companies chart or its balance sheet.

There will always be claims of Holy Grails.

I have my own.

"In any attempt to increase wealth you need only do one thing.
*Income must exceed expenditure*".

Now whether that be in Business/Property or Trading there are millions of ways of honoring that statement and millions of ways of failing it.

Analysis ALONE will not guarantee Income over expenditure--analysis fails.
Even the soundest of Money Management Principals can also fail---No amount of sound MM will save a flawed Business/Trading model.

*The holy grail is *the ability to skew Business/Property and or Trading to a positive expectancy and maintain it.

The rare few in all fields are/become extremely good at it and the majority are miserable.

So ask yourself this every time you have an expectation.
"Will what I do satisfy the "Grail" if so How?

Simple???--- Not for the larger majority.


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## motorway (27 February 2010)

Niederhoffer  seems to

Not have used TA in any excepted sense
Seems to write articles denouncing it

eg His Book chapter ==>  The Hydra Heads of Technical Analysis

& seems to not believe in TRENDS or esp TREND FOLLOWING..

But dyor 

Motorway


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## Boggo (27 February 2010)

Let me see, fundamental analysis is the one that has a broker hold valuation of $8.40 on TOL, a valuation of $1.30 on CSS and a valuation of $4.75 on TLS.

The other one must be the technical analysis thingy, that's where you buy (or sell) because it is showing signs (signs = tricky bit) of going in the direction that may make you some money. Apparently you can also put on a stop thingamebob that can limit your losses too, cool hey.

Now which one to use, this is difficult, to trust the people in big buildings or some lines and patterns on charts.
I think I will just ring a financial planner and let them do it, all of those three stocks are cheap now and they will tell me which one to buy more of


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## Profiteer (27 February 2010)

Dr Niederhoffer's fund was rated the best for 12 consecutive years, he made hundreds of millions before he went bankrupt.

By the responses here, you guys are definitely better than him and have made billions.

Thank you for clearing it up for me. You made my day


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## prawn_86 (27 February 2010)

Profiteer, 

being a new member, why dont you go and do some searches of previous threads. There has been numerous threads like this, and numerous people have been shown to be consistently profitable using both methods over many years. Academics can make a study say what they want.


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## Trembling Hand (27 February 2010)

:bunny:

Troll

Peanut


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## Boggo (27 February 2010)

This guy has got it all figured out 

http://www.forextradingreviewer.com/chartists-and-the-technical-analysis-course


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## motorway (27 February 2010)

Profiteer said:


> Dr Niederhoffer's fund was rated the best for 12 consecutive years, he made hundreds of millions before he went bankrupt.
> 
> By the responses here, you guys are definitely better him and have made billions.
> 
> Thank you for clearing it up for me. You made my day




How many *here *have gone BANKRUPT I wonder ?

 What has Niederhoffer got to do with the TOPIC ?

Technical Analysis: Useless?


He has a lot  to do with what tech/A is Talking about
But where is the connection to TA ?

Demonstrate where he USED it
So we can discuss

I can find no such example



Motorway


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## wayneL (27 February 2010)

Trembling Hand said:


> Yes agreed completely useless as a "tool" for prediction. The problem though is that traders, real ones that last, don't use it for that. Which is why these academics are wasting their time.
> 
> But this argument is as old as the hills. Three camps -
> 
> ...




Nothing more need be said.

This is the alpha and the omega of T/A.

Category 3 are those for who it "works".


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## Profiteer (27 February 2010)

motorway said:


> He has a lot to do with what tech/A?
> 
> I can find no such example




Dr Niederhoffer is the father of statistical arbitrage (algorithmic trading).

http://www.google.com.au/search?num...tistical+arbitrage&btnG=Search&meta=&aq=f&oq=


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## professor_frink (27 February 2010)

Profiteer said:


> Lets try not to get personal






Profiteer said:


> Are you better than Dr Victor Niederhoffer?






Profiteer said:


> By the responses here, you guys are definitely better than him and have made billions.
> 
> Thank you for clearing it up for me. You made my day




LOL!

This is all way too familiar for me


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## prawn_86 (27 February 2010)

Thread closed


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