Trading Philosophy - Technical Analysis and Printing Money in the Sky
When "trading gurus" think they have the answers...
I read an article recently (by Andreas Clenow) on why Technical Analysis (TA) has been tainted over the years and I believe it encapsulates a lot of what I believe.
Because the article is incredibly well written and really addresses a lot of what I would have had to say about the matter, I think it is best for readers to directly read it. It’s a fantastic read that goes through many topics such as:
The Core of Technical Analysis
The Rise of Technical Analysis and Its Downfall
Technical Analysis as a Shortcut to Riches
The Problem with Indicators and Exotic Names
The Lunacy of Magical Numbers and Wave Counts
Link to Article: Why technical analysis is shunned by professionals
One aspect of the article that really stuck with me was the TA community pushing what is basically pseudoscience. Fibonacci numbers and wave counts are often touted as having predictive power, but they are based on flawed logic and a lack of understanding of the financial markets. These mystical approaches to technical analysis only serve to further discredit the field.
The lack of a clear definition of TA has allowed it to encompass everything from drawing random lines on a chart to using the stars and moon to dictate your actions in the market. No really have a look…
Sometimes I think, am I just living in an upside-down world? But I always have to remember that trading is hard. I mean really hard! It takes time, hard work, and effort. It doesn’t come overnight. But what can come overnight is selling a dream to someone who wants to pursue trading! A course that will make you rich or the idea that by doing this one thing, by following this one technique, or drawing these lines on a chart, YOU will be successful.
For example, this article by Fortune highlights a girl named “Stefaniya Nova, who goes by @blonderichwitch on TikTok, is a 25-year-old living in New York City using astrology, tarot, and “intuition” to guide her day trading”
And again, this has more to do with the potential to make money selling a dream than anything else. The alternative would be that this person is in a delusion land and believes that she can predict the outcome of the stock market based on the stars, which is probably even more concerning.
But hey we will never know. The only thing I do know is you should run as far away from these people as possible!
-F4VS
Index:
Trading Philosophy - Eating Glass and Staring into the Abyss
Trading Philosophy - Technical Analysis and Printing Money in the Sky
