Is 90% of TA useless? | Forex Factory

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Is 90% of TA useless?

  • #1
  • First Post: Oct 20, 2010 11:36am Oct 20, 2010 11:36am
Hello

As we know, 90% of forex traders are loosing money in an enough long period of time.

As most of these loosers are using technical analysis, does that imply that 90% of technical analysis methods are useless?
  • #2
  • Oct 20, 2010 11:50am Oct 20, 2010 11:50am
No.

It implies that they don't know what they are doing
  • #3
  • Oct 20, 2010 11:51am Oct 20, 2010 11:51am
What do you mean? Please explain.
  • #4
  • Oct 20, 2010 11:56am Oct 20, 2010 11:56am
"Hands untrained in the use of tools destroy what they want to build. It takes skills to use tools to achieve the result desired, whether it's tearing down an old house or building a new one. Skepticism is a tool serving both purposes. But it must be used by a trained mind, a mind capable of disciplined thinking."
~J.B. Charles

TA is a tool. And just like any other tool, it needs to be mastered.
  • #5
  • Oct 20, 2010 12:07pm Oct 20, 2010 12:07pm
Case in point

A nail gun can be used to build this:

http://www.tpaa.com.au/images/boronframe.jpg

and/or an alternate use:

http://www.foxnews.com/photoessay/ph...9_nail_gun.jpg
  • #6
  • Oct 20, 2010 12:12pm Oct 20, 2010 12:12pm
Quoting Slack
and/or an alternate use:

http://www.foxnews.com/photoessay/ph...9_nail_gun.jpg
these are the 95% of traders using a nail gun that was handed to them. Reading the nail gun's operations manual won't make you a nail gun expert.

Educational material versus real life situation are two different things.
  • #7
  • Oct 20, 2010 12:24pm Oct 20, 2010 12:24pm
I'm sorry but I have to disagree a little. A lot of "technical analysis" (by this I mean the tools people use here on forexfactory, etc.) is useless. What I mean is, moving averages, stochastics, renko, etc. are just telling you something that is already on the chart. In other words they tell you if there is a trend, but that doesn't mean it is going to continue. So in terms of consistently predicting price movements, I would call a lot of it useless.

I am not saying you can't make money with technical analysis, but just that a high percentage of the methods people come up with based on standard indicators are "useless" in terms of predicting price movement.

I only use technical analysis myself, and I know that you can consistently make money without any fundamental analysis, if you know what you're doing.

Cory
  • #8
  • Oct 20, 2010 12:55pm Oct 20, 2010 12:55pm
Quoting Cbh123
I'm sorry but I have to disagree a little. A lot of "technical analysis" (by this I mean the tools people use here on forexfactory, etc.) is useless. What I mean is, moving averages, stochastics, renko, etc. are just telling you something that is already on the chart.
What they don't teach you of what moving averages can do:

 

  1. To identify whether there are more buyers than sellers (and vice versa) in the market at a given time span.

  1. To identify the increase and decrease of momentum of buyers and sellers. Momentum plays a role in assessing the level of risks you are taking.

  1. To identify the shift from one market condition to another, depending on price deviation from the moving average.

  1. To identify the beginning phase, the middle phase and the exhaustion phase of the market condition.

  1. To identify or simplify multi-timeframe into a single time frame.

  1. To get an objective (rather than a subjective pov) direction of price at any given time span.

  1. To identify a higher probability of entry point within a major trend.

You know, they didn't create the MA because it looks good. They created the MA for/with a purpose. Of course, why would they tell you its purpose, in a 'zero-sum game' dealing with millions of money?

  • #9
  • Edited 1:15pm Oct 20, 2010 1:05pm | Edited 1:15pm
Yes, most of the common stuff floating around, also here on FF, are mostly useless for making money.
Measure twice, cut once
  • #10
  • Oct 20, 2010 1:08pm Oct 20, 2010 1:08pm
Dear CrucialPoint! So what you mean is that the useful sections of technical analysis is mostly out of public domain and is kept secret that little people know about?
  • #11
  • Oct 20, 2010 1:10pm Oct 20, 2010 1:10pm
Quoting aediaz1
Yes, most of the common stuff floating around, also here on FF, is mostly useless for making money.
I'd say 95% are rubbish. Of course they keep it posted to get traffic and revenue... and freedom of speech
  • #12
  • Oct 20, 2010 1:21pm Oct 20, 2010 1:21pm
Do you think there is a clue to get a peek into the 5% part? Is personal experience the only way to reach that or ... ?
  • #13
  • Oct 20, 2010 1:29pm Oct 20, 2010 1:29pm
Quoting mahdiquant
Do you think there is a clue to get a peek into the 5% part? Is personal experience the only way to reach that or ... ?
Its all bread crumbs all over the place, you need to pick it all up and put it all together for yourself. Experience plays a role, but not the defining factor. You either have what it takes or you don't, not everyone is cut to be a trader, IMHO.
  • #14
  • Oct 20, 2010 1:32pm Oct 20, 2010 1:32pm
Quoting CrucialPoint
I'd say 95% are rubbish. Of course they keep it posted to get traffic and revenue... and freedom of speech
I think the reason why TA is so useless for most people on FF, is lack of proper education.

Think of it, the reason why people strive to educate themselves, is because they want to learn a set of skills they successfully can apply in real life, hopefully making a living out of it. A good school is capable to sharpen and shape your mind into the chosen direction.

So if you want to learn proper TA, you should first start by picking the right education. At best, FF is a place where you can get in touch and establish personal contact with someone who practice TA for a living. IMO, this process is tough and will probably filter about 95% of all students.
Measure twice, cut once
  • #15
  • Oct 20, 2010 1:45pm Oct 20, 2010 1:45pm
Quoting mahdiquant
Dear CrucialPoint! So what you mean is that the useful sections of technical analysis is mostly out of public domain and is kept secret that little people know about?
I'm going to get ripped, torn and shredded into pieces to answer this.

I would say Yes.

I won't argue this point. You can think whatever you like. Just keep in mind that you are dealing with billions of money at stake. You are dealing with human beings. As much as I like to see the good side of humanity, greed is part of its nature. Greed and corruption is evidently happening within the highest of every societies hierarchy.

Can one be that naive to think that it is not happening in trading?
  • #16
  • Oct 20, 2010 2:36pm Oct 20, 2010 2:36pm
Yes! I think that would be the easiest answer to the question, but I'm not sure if it is the most appropriate answer.
  • #17
  • Oct 23, 2010 3:29am Oct 23, 2010 3:29am
Any other idea?
  • #18
  • Oct 23, 2010 4:45am Oct 23, 2010 4:45am
Quoting mahdiquant
Any other idea?
Get a copy of David Aronson's book evidence based technical analysis, and read it VERY CAREFULLY, and then stop wasting your time on forums.
  • #19
  • Oct 23, 2010 5:31am Oct 23, 2010 5:31am
Quoting CrucialPoint
You know, they didn't create the MA because it looks good. They created the MA for/with a purpose. Of course, why would they tell you its purpose, in a 'zero-sum game' dealing with millions of money? http://cdn.forexfactory.com/images/s...m/thinking.gif
Who are they? Who create Moving Average? Do you think MA was created exclusively for this zero sum game?
  • #20
  • Oct 23, 2010 8:06am Oct 23, 2010 8:06am
Quoting sangmane
Who are they? Who create Moving Average? Do you think MA was created exclusively for this zero sum game?
From my understanding great traders such as WD.Gann and Richard Donchian were calculating moving averages long before computers came about. They physically calculated each price action daily on pencil and paper.

Computers came along and then you have these programmers developing it into softwares that would calculate and plot the averages. These programmers new the formula how to calculate the moving averages and that's as far as it goes. I don't recall these pioneer traders ever teaching the deeper concepts, the public was left to figure out how to use these averages. And of course, the conclusion were to buy above the averages and sell below them.

I mean, if you take it at face value alone, an umbrella is used on a rainy day so you won't get wet. If I pick up an umbrella and began to open it on a hot summer day, your reaction would be confused. Why would I be using an umbrella on a hot summer day when clearly it is not raining? You might even laugh and think that I'm crazy. Well, the umbrella is used for a shade from the burning sun. There are more uses of the moving average that one may be aware of

No. The MA wasn't created exclusively. It was just a tool that was created.
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