The vast majority trading on fundamentals are clueless too. Doesn’t say anything as to whether there’s merit to it, which is something this thread will never answer because no one seems to agree on how to define it.


If TA was obviously trash science it seems like the better advice to people who didn’t realize that for themselves would be to just not trade at all.

Yes but there are people using it to achieve profitable results. Some of those people are posters in this thread.

Even TS said that research supports some edge of TA in commodities markets, and he has provided the most arguments in this thread against TA.

We have zero evidence that people make money using it in US equity markets, especially on individual stocks. mrbaseball is a commodities trader who worked in a firm with access to trades and information not available to retail. He has no clue about US equities and no history of profitability.

No one who claims to post TA here has posted a bunch of real time trades.

XIV/short vol is an excellent of example of TA trading that worked for years to high profitability, before a single day sent them bankrupt back in January.

This cuck for example claims to have made $12 million, then he lost it all in a few days.

We had a forex guy here make 1000% using pure TA in a few hundred trades, then lost it all back and more in weeks and has lost continuously since. If you're one of the lucky 1 in 20 or 1 in 50 whose key trades fit with the random walk you're on for years, you appear to do very well at TA when really you're just the selection biased lucky fish, while the rest of the TA traders slowly lose money/underperform to fees and spread, since they have zero edge.

Then you have the fact that people use more than TA - news, fundamental changes such as after earnings, and mix it with TA. They could be profitable indefinitely even though TA has no edge at all. Hedge fund managers who used astrology in addition to other strategies (we can both agree this is bull****/zero edge?) did well for a decade running up into the 2000 tech bubble. Was it astrology that was working for them?

Frankly that has little to nothing to do with TA.

That was that dude's emotional state and his lack of experience with risk management.

Practically speaking, the system doesn't matter in the sense that anyone can go bust with a winning strategy if they have bad risk management...

The point is that fundamentally unprofitable TA strategies can run for years to decent profit even by total morons if the random walk you're on coincides with the TA signals you play. It's even more pronounced if you have a strategy where you use enough money for a long term unacceptable risk of ruin.

Saying that you know profitable TA traders is meaningless. Given that the market goes up 40%/year anyway in bull markets, plus the action of luck, you can run good for many years with a no-edge strategy if your performance bar is "making profit" rather than "beating the market"

Well, it's good to be a bull in a bull market. I wonder, if the market loses 10% for the year and I just sit in cash, have I out-performed the market?

CBs are printing money and the market is going up. I don't see anything wrong with buying the dip. You could do that with no charts at all and just data...so what if people determine a 2 STDEV move visually with Bollinger Bands instead of a spread sheet?

So what if they take profit at fib-extensions and define buying the dip and as a move back to the 50 day SMA?

The notion that a TA strategy runs good for a couple of years is kind of silly. If it aint broke...don't fix it. Buy the dip and until we are in a bear market. Define a bear market as a cross of the 50 and 200 day SMAs.

So what. Its, its TA, its not. It is not that TA is broken, its how you use it.

In a certain sense, TA can never be wrong...the only truth is price.

TA is a combination of art and science, much like poker.

Say you take the current interest rate, discount the cash flows of equity XYZ and determine that XYZ is over valued.

You short. And it rallies. The math is right though. I mean why would anyone own this pile of **** when they could just buy a riskless CD. Surely it will correct and you will be proven right in the end...

From the man of central banking himself, "Markets can remain irrational longer than you can remain solvent."

The only truth is price and the markets aren't irrational (again Keynes was wrong). The notion of rationality doesn't apply to them. Its just supply and demand.

An example of "market psychology": YOLO, buy TSLA all day...

If bidders keep hitting the ask on an option the price will go up, regardless of Warren Buffet's opinion on the fundamentals or Fischer Black and Myron Scholes opinions on volatility or any of the other greeks...

Right. Prices are determined by the interplay of supply and demand. Obviously. The same as random walks are determined by the interplay of supply and demand (the random algorithm buying or selling). I don't see how you've gained an edge.

To claim that TA works, you have to make the claim that past performance predicts future performance at level that beats fees and spread. Does it, in a way that allows you to also beat the market? Where is the evidence? It should be trivial to find. We can crunch trillions of operations and gigabytes of data per second with supercomputers. Given that price/volume is full information purely mathematical on a not-that-large dataset, it would be trivial to extract winning patterns out of data sets, should those patterns exist, at a far higher level of sophistication than humans can. The human mind is about 8 orders of magnitude slower at crunching numbers and can hold a few things in our minds at once and is subject to the dumbest of confirmation biases.

Maybe there used to be reliable profitable TA signals before the computers turned up (the age of mrbaseball's commodity pit trading and most celebrated TA traders), but now there's hundreds of billions in capital analyzing this stuff with supercomputers 24/7, who can front run you in milliseconds. The odds that the retail trader has an edge in short term TA is zero. In fact, some of these algos very likely exploit the stupidity of the retail TA trader - run it down to take out their TA support stops before adding, for example.

Maybe that's why this cuck - one of the most celebrated of TA traders who claims 40% annualized for 18 years - is selling $400 packages to confirmation-biased assclowns rather than trading TA?

link doesn't work...

If you define technical analysis as use price patterns as a primary way to make trading decisions then just about everyone who successfully trades for a living uses technical analysis. I have no idea how you would do anything else.

Successful trader who uses purely technical analysis that was ridiculed here: https://forumserver.twoplustwo.com/3...s-com-1112067/

Couldn't help but notice he bought a $3.1 million house a couple of years ago. https://www.chicagobusiness.com/arti...illion-or-more

Hedge fund with outstanding performance that has a one day hold using only price. https://ctaperformance.com/crabel
He also wrote a book with a number of quantified patterns. https://www.amazon.com/Trading-Short...ds=toby+crabel

there are areas where slim advantages can be gained but you dont see a surge in people making money this way...it was very common in 2000 to be a day trader but not at all today. that alone tells us that the profit isnt there.

with crypto people were day trading again...but its easy to trade into a rising market. I doubt you can swing trade the crypto over the last 6 months and be a big winner. obv there will be exeptions but it would be hard to do in a falling market

This is a good point.

Also, TS has probably convinced me that trying to trade using TA will most likely be a waste of time.

I respect those that say it works for them. But it seems like there only reasoning for why it works is market psychology. Herd behavior is predictable and the charts show it and history will repeat itself....

It seems too likely TA traders are trading a random walk and any of their real edge, if they had any at all, is going to be eaten up first by the supercomputers.

Throw in all the gurus selling courses rather than making $ trading themselves....

Also, maybe this a derail, but to TS, I think you mentioned that a lot of your trading strategy is based around the news. How do you setup a winning trade based around that? Perhaps provide a brief hypothetical scenario or a past trade....

Forgive my ignorance, but is it really that much different than TA in the sense that you are factoring in market psychology? "This is what market participants tend to do when this specific event happens so I'm predicting the price will rise to x in 3 months time..."

Seems like you could be waiting a long time to make a trade.

We never see the stories of the potential thousands that use TA and slowly bleed money. Many are likely trading strategies that used to have an edge but don't anymore. Obviously, Im no expert. Im just thinking out loud.


If you think about it, how can the successful TA practitioners not be the lucky ones? People just looking at charts at different time frames and using different oscillators and indicators. Even if it works for a little bit, how will you know when it no longer works anymore or if it ever worked at all? Do you give up after 5 trades? 10 trades? Seems too likely you will become a button clicking monkey always looking for the next new setup as soon as things go wrong. Without math to back up what you're doing, how can you be confident that you're not trading noise?

Maybe I sound lazy, but if your strategy is not something that you can consistently rely on for profit, and you can't quantify you edge, then it seems like it's not worth learning. No? The amount of time wasted searching for new setups and chart techniques is going to cut into your hourly, if you even have a high enough one to begin with.

But then you have cases like Mr. Baseball that seem to use the KISS method to trading and do well. But is it enough to make a living? Are there enough setups or is it like once in a blue moon you get a pretty reliable pattern?

The edge doesn't just flip from 1% to like -1%. You stop using the system when the performance suggests the edge is not statistically significantly higher than some minimum threshold.

And yes, you're constantly looking for new edges.

Mediocre trader. Make mid six figures trading. No shortage of guys who make a lot more.

Trading is a skill activity like golf. You can read about grip posture stance alignment or support resistance trendlines breakouts volume overbought oversold but that is the easy part. They aren't formulaic activities. Putting things together into a workable mosaic is the hard part. I made around 150 trades or so the last two days on just a few ideas. You might put on a trade, take it off if it moves against you or put on a trade and slam it harder if starts to work and then take partial profits if it has a sharp move in your favor then re-enter on a retrace, etc. That isn't something you follow out of recipe book. Though I think there is a ton of value in quantified trading signals that you can integrate into your process.

Bottom line is there are no magic signals but using references points and having a general framework for viewing the market are important. I don't know of anyone who trades for a living systematically. Though I gave an example of a large fund that trades systematically off of technical signals. Here is another example. https://ctaperformance.com/qim

There is zero chance you're a long term winning trader. The market doesn't have edges large enough that a single person can make ~100 trades in a day which are overall +EV after fees and spread.

Oh, ok. Sounds like you know what you are talking about.

I mean, you need at least a 0.1% edge per trade at least to beat fees and spread at most brokers and often higher unless you're putting down tens of thousands per trade for each of these 75 trades/day.

If there are 75 of those a day (that you alone can find), then there are vast amounts of money to be made. One month of trading with edges this large pays 1200% ROIC.

Even if you have a super cheap broker like Interactive Brokers, you'll still pay 1-2c minimum per trade in spread in the most liquid stocks, plus some fees. If you trade less liquid or more volatile stocks, you're pay 10-20c spread per trade. The smallest cost I think you could achieve trading the most liquid stocks at the best retail brokers is 0.02% per trade. Even that is 60%/month ROIC.

There aren't edges that large in the market on that frequency of trades, or small quant funds would easily be returning 5000%/year reliably.

Regarding the subject line, a more realistic question would be, "Does anyone who day trades NOT use technical analysis?" I would venture very few exist on that timeframe. Sure they can use other information too, and do.