Understanding Technical Analysis
Technical analysis is one technique used for analyzing the performance of markets and stock picks, (and other areas of business), by analyzing key trends and data. Most often, the variants analyzed are pricing, volume and time scale, though many other factors can be taken into the equation. A lot of the studies are completed through charts, and have since given rise to analysts being dubbed "chartists".
However, whilst it sounds an acceptable technique; many actively and loudly argue against it. They claim there is no strength to the theory behind it. Those for it argue the opposite; and suggest that results generated are proof of it working.
However, countering this view are those that question why it has not led to a robust automatic trading system, however, this would of course negate the human analytical mind so often falls flat as an argument.
Other arguments against it are heard too; most loudly of all tends to be the fact that evidence of the technique being the reason for a successful strategy are never given; though this is countered by the response that evidence is given, just not understood. A weak argument for many.
In essence though, the arguments for the technique are sound. Anything in life can be analyzed, and lessons learned; history to name but one of course! However, the issue seems to be in the selecting of trends to study, and in the application of strategies taken from them; but market trends do appear; it is just a question of spotting them at the right time.
However, whilst different opinions are rife across many bodies; one thing does seem to bring both group together; that technical analysis should not necessarily be relied upon solely. And this is only sensible of course. After all, there are not many of us out there that go out foraging, only to place all of our eggs in just the one basket. - 23196
However, whilst it sounds an acceptable technique; many actively and loudly argue against it. They claim there is no strength to the theory behind it. Those for it argue the opposite; and suggest that results generated are proof of it working.
However, countering this view are those that question why it has not led to a robust automatic trading system, however, this would of course negate the human analytical mind so often falls flat as an argument.
Other arguments against it are heard too; most loudly of all tends to be the fact that evidence of the technique being the reason for a successful strategy are never given; though this is countered by the response that evidence is given, just not understood. A weak argument for many.
In essence though, the arguments for the technique are sound. Anything in life can be analyzed, and lessons learned; history to name but one of course! However, the issue seems to be in the selecting of trends to study, and in the application of strategies taken from them; but market trends do appear; it is just a question of spotting them at the right time.
However, whilst different opinions are rife across many bodies; one thing does seem to bring both group together; that technical analysis should not necessarily be relied upon solely. And this is only sensible of course. After all, there are not many of us out there that go out foraging, only to place all of our eggs in just the one basket. - 23196
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posted by X - Men @ 2:03 AM
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