I like how they added “analysis” to “technical analysis” as if it had some kind of validity
Hey, there’s fundamental analysis, then there’s technical analysis, so both are equally valuable, right? Just two form of “analysis,” two ways to see the market.
Hint: hell no. Technical analysis has ZERO scientific value. It’s exactly the same as someone playing a slots machine and thinking, “I’ve gotten a 7 on the left side six times in a row, now I’m due for a jackpot any second now.” It’s the same as playing roulette and thinking, “This roulette has returned seven red in a row, it’s due for a black anytime now!” or “this roulette has returned 22 red out of 30 spins, it clearly is defective and gives out more red than black! Therefore, I should bet on red!”
IT’S BULLSHIT!
It’s pure pseudo-science, guys. It has ZERO scientific validity. It’s something that was pulled out of thin air and promoted by “gurus” in an attempt to give it credibility. You know all those quacks selling crystals to cure cancer or pretending that there are vibrations that put you in harmony with the universe? Technical analysts are the Wall Street version of those guys, albeit maybe a little less dangerous (maybe).
If you don’t know what technical analysis is (good on you), it’s basically the most annoying thing to ever walk on this planet. It’s not my most hated thing because, let’s face it, there are a lot of things worse than that (illnesses, wars, genocides, hunger, Hilary Clinton) but it always irks me a little to read what I think is a good article and read at the end something like “the 200-day moving average also indicates the stock might be climbing back from its heights blah blah blah.” Immediately, I know I have to forget everything I just read and throw the article to the trash. In a way, perhaps I should be happy technical analysis exists, because it tells me exactly which authors to avoid.
Every analyst who actively promotes Technical Analysis as a way to earn a return higher than the market on a risk-adjusted basis is a moron. TA has never worked and never will. If you seriously think you can look at a chart and guess in which direction the product is moving with any degree of certainty higher than the average, you are wrong.
Do you honestly think beating the market is that simple?
If it was this easy, everyone would do it. Period
Technical Analysis is the kind of thing you can learn in an hour. There’s nothing even slightly complicated or advanced about. When the most complicated mathematics about it is
RSI=100-100/(1+RS)
where
RS = Average gain / Average Loss (on 14 period because, well, because)
RSI = nothing at all
you know you have a problem. Hint: that’s not a complicated mathematical formula.
Unless you’ve worked at a proprietary firm, you have NO IDEA of what you’re going against!
A single proprietary trading firm can have enough computers to fill your house ten times and then some. Each of these computers can easily be $50,000 or more. These firms have zero problem hiring the best programmers in the world for $500 per hour or more to program some of the most complicated programs that ever existed. I’m telling you that people trading at proprietary firms are at least as smart as NASA engineers and sometimes smarter. Except for a tiny number of individuals devoted to making this world a truly better place, in this world, money is a much more powerful motivator than the pursuit of scientific progress. Don’t believe me? A NASA engineer earns something like $100,000 per year. A good trader can EASILY earn $100,000 per DAY. EASILY.
In my career, I saw a data center used for trading that was so large I couldn’t see the back wall. “We haven’t even used most of the computers you see here,” said the guy to me. The firm had been operating been for more than ten years. That gives you an idea of how just well-equipped and well-capitalized these guys is.
These guys have no problem investing millions to cut their ping from 2s to 1.99s. They have no problems paying an additional $10,000,000 per month rent just to have a office that is half a mile closing to Wall Street just so their orders will pass through a milli-second faster. These people have no problems offering a $500,000 signing bonus to grab the best financial engineering grads and then offering millions of dollars in bonuses every year, even if the trader doesn’t perform all that well.
These people can test BILLIONS of possible technical analysis indicators and combinations on about every single product that exists a million times by the time you notice your little “A heads and shoulder pattern is forming!” These people can send a million trade by the time your finger hits the “buy” button. These people can backtest millions of strategies in real time by the time you blink your eyes. And despite all that, the vast majority of these funds do not beat the market on a risk-adjusted basis over an extended period of time.
Do you really think your stupid moving average crap can compete with them?
If you do, go get interned somewhere, because you are basically insane. If you ever listen to a “technical analyst” on TV (you haven’t needed a professional title to be considered a pro for a long time, but now, apparently you don’t even need to understand the market at all) and have any reaction other than laughing at him, trading is simply not for you.
Technical Analysis is to Trading what Astrology is to Science
