We do both fundamental and technical analysis at cryptoeq.io and we don't think either one is mysterious or akin to horoscopes.
With technical analysis you just have to understated that a 60% win rate is good (that means you lose 40% of the time). So you have to understand and accept you going to lose almost as much as you win but as long as you win more you make money.
With fundamental analysis the main thing to consider is a crypto asset is not a stock and is not valued the same way stocks are valued. Because most analysts only know how to value stocks they are confused when trying to value crypto assets.
If it worked, the pattern would instantly be recognized and negated by the whales that have multi-million dollar computer systems devoted to taking advantage of tiny discrepancies on the scale of milliseconds.
Nobody can seem to explain why it would continue to work in the age of AI-driven and big-data-driven instantaneous trading (if it ever worked in the first place). Can there really be a big, obvious pattern that is easily recognizable by the average basement-dwelling "day trader" that is not previously available to a corporation with the resources to support billions in daily trades?
Insufficient TA is bad, sure. Good TA works, that's why plenty of professionals use it. That's the correct answer here. There's no 100% guarantees, the market wouldn't work if it was. Good investment requires an acceptance of loss through risk.
Watching patterns can be helpful when looking at the probabilities of the big picture. But what’s going to happen in the very near future depends on political and socioeconomic events, not on imaginary flags, triangles or lines. I’m enjoying this conversation. Both sides have good points.
TA is something that can only be done by people with a high visual IQ, and it can only be used by people with the experience to follow the predictions and understand the probabilities. It takes some nerves to use TA to buy the dip.
Due to combined requirements of visual IQ, trade discipline and understanding of probabilities the people that can filter through TA and cast out the garbage and then follow through on the trade is probably less than 5% of the population.
Technical analysts are food for whales. Obviously if you follow stupid rules in an unregulated market others will pick up and take advantage.
Imagine using the horoscope for deciding your moves in a poker game and letting the table know about it.
Right now? 85% bullshit. Some people make it work...or maybe they're just lucky. In the near future though I think AI will make a killing with TA. There are patterns they'll be able trade on with a very scary, un-human certainty.
Most of the people who say TA is bullshit start from some variant on “TA can’t be right all the time, or everyone would use it” or just “TA isn’t right all the time, so there.”
Most people who support TA consider it a single tool in their bag. It doesn’t need to be 100% effective to be a good tool, just better than 50%.
The only large scale study I’ve read on the subject (sorry, I don’t have the link atm), said that TA’s slight advantage exists but is largely eaten up by trading fees, but that the advantage for TA increases in emerging markets with low liquidity.
Many people use TA exclusively to decide when to set their price targets. If anyone wants to challenge this, it would be pretty easy to backtest two strategies, one that buys whenever the RSI is above 80 and sells below 20, and the other the opposite.
Nassim Nicholas Taleb rails on TA in "Fooled by Randomness". The book discusses how human brains are excellent pattern-recognizing devices, and will see patterns where none exists. Taleb also points out the inherent survivorship bias in TA discussions - someone claims it works (anecdotally), because they know how to do TA. the ones that TA doesn't work for, must not know how to perform TA. These "losers" are excluded from the TA camp, because they must have done their TA wrong.
People also confuse making money, with making a smart financial decision. Someone can make money throwing dice, but that doesn't mean that financial model is sustainable. Taleb points out "skewed distributions": situations where the odds are not intuitive. Black swan events like crashes are counter-intuitive events where it is hard to determine the likelihood it would occur, and when. Taleb states: "Option sellers, it is said, eat like chickens and go to the bathroom like elephants" i.e. investors may may gain small, consistent amounts on speculative ritual, then lose a fortune during disaster event.
I've never seen so many useless idiotic comments from losers who can't perform TA, therefore it MUST not work.
I've made a career out of technical analysis.
Don't listen to people who have never succeeded in anything in life, about how to go about yours.
TA had me buying my BTC in November/December at ~$3600.
What you have in BTC here is a new asset class, and a lot of people who have gotten lucky.
Same can be said for anyone that started financial industry careers in the last 10 years.
They accept the fact that they've gone 10 whole years in the industry making clients money, therefore they must be good.
That's what everyone in these comments "Redditors for 3 months" bullshit sounds like. Not being but lucky losers.
Wait til those financial industry professionals get hit with a real down cycle. 10 years of experience and they've never had one. You can't be good until you have that experience.
TA lets you go back in time and see the conditions that allowed for such economic downturns. And if anyone tried telling you it's only good for thenpast, and not the future, then they suck at what they do and you shouldn't listen to them.
Also ask them how the fuck I bought BTC at $3600 this winter. How I bought TSLA at $178 a few months ago. And why I just bought CGC back this week.
Don't take your advice from lucky losers who suck and can't comprehend TA.
At the same time, ppl thinking TA is magical bullshit means my job is SECURE.
If you were what you claim you were you'd be a billionaire, otherwise it's just luck. Same reason why fortune tellers are shit poor until they manage to scam people into thinking they're legit and start to profit off their bogus scams. You offer your advice for a low price until you make a name for yourself and get rich off telling other people bogus advice, despite the fact you should given be able to be the richest and most successful person alive given the abilities you claim to have.
You think understanding TA should automatically make someone a billionaire hey?
Honestly I don't even know where to start with such an idiotic statement.
I'm just glad there will be no running out of helpless sheep in these markets giving their money away.
While I agree with some of what you say, and had similar views around 4k when it broke its 200DMA. The higher highs/higher lows over a moderate amount of time is about the only indicator I care about, because it's logical and showing you buyers/sellers are/aren't coming. It was basically showing the inverse of what happened when 6k broke down (kept making lower highs and bouncing on 6k until it gave out).
The problem is, you're not always right, no one is. I had to stand back in recent weeks with BTC because it became too unpredictable (for little old me at least). I never trust people who act like they aren't wrong some of the time, and everyone is and thus why TA is not static for anyone...unless you're the Neo of TA and we're in the matrix.
First, TA is subjective. As opposed to math or science, with TA everybody gets his/her own "answer". It's more like reading tea leaves, palm reading, or visiting a "psychic". Of course, the people who pay to visit the psychic will swear that the psychic is real, but it isn't real.
Second, TA is firmly rooted in bullshit, by professional liars -- desperate stock brokers trying to generate "churn" (to earn fees) by tricking gullible people into believing that the broker has special knowledge, tools, abilities, etc. Think about it: IF the broker had some sort of advantage, they could quickly become excessively wealthy, but there they are... trying to generate "churn" to earn fees to pay their bills. I guess they DON'T have a special, market-beating advantage after all.
Third, TA presumes that tomorrow's price direction depends only upon recent price changes. That presumption is false. Tomorrow's price depends upon tomorrow's supply and tomorrow's demand, which are partly influenced by recent price changes, but mostly influenced by events - events which have nothing whatsoever to do with recent price changes. For example, the leader of a country decides to make a tweet, or some other government announces a new law/policy dealing with Bitcoin and or economics... or a central bank decides to make an announcement about interest rates, QE, etc.
You can't just draw lines on a chart and predict the future. Only fools believe in such.
>First, TA is subjective.
No it's not. There are plenty of indicators that rely on mathematical formulas (for example the ichimoku cloud and Williams' fractals) and output some sort of objective metric. If you think that this is subjective, then a lot of science is simply subjective in your opinion. Cigarettes cause cancer? That's subjective because they relied on a t-test to tell them if their results are statistically significant, and that is a completely subjective metric.
> Second, TA is firmly rooted in bullshit, by professional liars
I would like you to provide some evidence for this.
> Third, TA presumes that tomorrow's price direction depends only upon recent price changes.
This is just flat-out a misrepresentation of TA, and gives the impression that you don't actually know how to do TA. Furthermore, I presume you believe that meteorology and weather prediction is a legitimate field of science, and that too relies on historical data to make predictions about the future.
Let me close by describing what I think TA is in an effort to enlighten those who seem to have a negative view towards it. TA is basically a series of litmus tests and pattern recognition that you use to give you an idea of what is going on. I have NEVER heard/trusted anyone who says they know for sure what is going to happen just like I would be suspicious if the weatherman came on the news and said they knew it was going to rain tomorrow. Just like the weather, TA will give you a sort of % chance of rain. Any honest person who uses TA will tell you that they do not know what will happen tomorrow, but they can tell you that there are dark clouds up ahead and to be ready in case a storm hits.
Models are fine, but they're only as valid as their ability to predict outcomes. The existence of mathematical formulas that produce objective metrics doesn't mean that those metrics map to reality in any meaningful way.
Further compounding this problem is that the people creating and using those metrics are themselves part of the system that they're trying to predict. This can cause self-fulfilling prophecies where, even if otherwise meaningless, the very belief in a particular metric or indicator can cause that prediction to come true (e.g., a strong sell indicator causes traders to sell on the assumption that the price will drop).
\[1\] **If short-term TA was reliable, then we'd all be making money listening to the TA pros.** You also wouldn't have people concluding different things with the same data, and people wouldn't retract their predictions upon slight changes.
\[2\] **TA for overall long term trends can be good indicators.**
For example, Index Funds like S&P500 has a clear general upward trend if you look at the trend over multiple years (with periods of downtrends during recessions). But **try predicting the date of the next recession**, even just the correct week.
That is true. It's a hell of analogy if I may say.
But the catch is... for some reason the past repeat itself more often than you think... and for some other reason human behavior is driven by patterns that tend to repeat itself often, aka market memory.
But that is the reality.
Idk .. the bots definitely use fibs to trade support and resistance you can see it happening .. crazy to watch. But its the moon boys on YouTube with the 40k & 10 million dollar btc that give it a bad name. TA is only really for day and swing traders. Don't bother if you a holder. I use it to accumulate more btc buying the dips selling the highs .. worked for ne.