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Why Technical Analysis Wins

  • #1
  • First Post: Mar 15, 2017 11:23pm Mar 15, 2017 11:23pm
This thread is for those who can give proof of why technical analysis is better than fundamental analysis.

I am interested in hearing your thoughts.

Cheers
Please check out my blog at https://from-zero-to-hero . net
  • #2
  • Mar 16, 2017 6:55am Mar 16, 2017 6:55am
its a coin flip either way as far as predicting the market because of a "Trade setup" sometimes it will work sometimes it will not
  • #3
  • Mar 16, 2017 12:23pm Mar 16, 2017 12:23pm
Imho this is the wrong question, it is not about the type of analysis used, it is only about whether and statistically significant edge can be measured. Personally I use any an all forms of analysis to try to find an edge, they key is testing the setups significantly over 10,000 setups are required to "prove" an edge is real.
F i n S i g . c o m
  • #4
  • Mar 16, 2017 3:18pm Mar 16, 2017 3:18pm
Quoting smash1820
This thread is for those who can give proof of why technical analysis is better than fundamental analysis. I am interested in hearing your thoughts. Cheers
what do you mean by proof ?... live trades ?live trade explorer or myfxbook ?
  • #5
  • Mar 17, 2017 11:17pm Mar 17, 2017 11:17pm
Quoting smash1820
This thread is for those who can give proof of why technical analysis is better than fundamental analysis. I am interested in hearing your thoughts. Cheers
Technical analysis(Price action,S&R,Supply and demand,Fibs,Trendlines)is better than fundamental because it sends out information on what price is doing and how to react to market sentiments in order to make profits.i don't really pay attention to Fundamentals as sometimes news events do fail to go to the direction its supposed to and news releases they say Guarantee future prices.no doubt about that but Fundamentals seems like a lazy man's work and a guess work so i rather not depend on Fundamentals for my profitability
  • #6
  • Mar 19, 2017 3:02pm Mar 19, 2017 3:02pm
Why restrict yourself to one kind of analysis? All the matters is that you find an edge, test it and exploit it.
I live entirely from the growth of my personal trading account
  • #7
  • Mar 19, 2017 3:35pm Mar 19, 2017 3:35pm
Quoting Vella
{quote} Technical analysis(Price action,S&R,Supply and demand,Fibs,Trendlines)is better than fundamental because it sends out information on what price is doing and how to react to market sentiments in order to make profits.i don't really pay attention to Fundamentals as sometimes news events do fail to go to the direction its supposed to and news releases they say Guarantee future prices.no doubt about that but Fundamentals seems like a lazy man's work and a guess work so i rather not depend on Fundamentals for my profitability
But fundamental analysis gives you the reason behind the price moves. So if you do fundamental analysis you get a better understanding of why markets move the way they move. The problem with technical analysis is that you just take the past price movements into account, whereas with the fundamentals you can anticipate e.g a rate hike and know what price is likely to do.
  • #8
  • Mar 20, 2017 7:09am Mar 20, 2017 7:09am
Frankly, I am not interested to compare technical analysis with the fundamental! Both are essential for market reading! Yes, I mainly use Price Action trading strategy that means technical analysis! On the other hand, I also respect fundamental events, even I close all of my trades before announcement and others important news events, thus I handle my live trading account!
  • #9
  • Mar 20, 2017 6:53pm Mar 20, 2017 6:53pm
Quoting metta87
what do you mean by proof ?... live trades ?live trade explorer or myfxbook ?
I mean anything and everything you find sufficient enough to be proof.

Personally, I don't care much about the "why", but only the "how".
Please check out my blog at https://from-zero-to-hero . net
  • #10
  • Edited Mar 21, 2017 12:02am Mar 20, 2017 11:52pm | Edited Mar 21, 2017 12:02am
This thread, as most, is doomed.

Show me a profitable t/a user and I'll show you a profitable t/a user who also uses a bunch of other analysis and doesn't just pray to the SMA and fibonacci gods.

Show me a purely t/a user and I'll almost certainly show you an unprofitable wannabe who probably spends far too much time on FF or other forums sucking the tit of the systems and journals sections.

The existence of threads like this should be proof enough. Why does one need to, more or less, beg for proof of something that has yet to be proven? Anything you can plot on a chart you can also apply t/a towards, and it'll still be just as useless.

If someone can give solid "proof" that t/a, alone, works and isn't just typical t/a worshiper waffling I'll shit my pants in disbelief. T/a has only existed for how many years now, and still needs proof?

t/a as most apply it is nothing more than computerized tea-leaf reading. Bring it on t/a sycophants! My body is ready!
Congratulations ScalaFX for coming out of the closet!
  • #11
  • Edited 4:31pm Mar 21, 2017 1:31am | Edited 4:31pm
Quoting smash1820
This thread is for those who can give proof of why technical analysis is better than fundamental analysis. I am interested in hearing your thoughts. Cheers
To this day, it's never been proven that technical is better than fundamental. Therefore, the question of "Why Technical Wins" will (most likely) only receive opinions. Not a scientific proof, or even a logical proof.
  • #12
  • Mar 21, 2017 1:47am Mar 21, 2017 1:47am
Quoting smash1820
This thread is for those who can give proof of why technical analysis is better than fundamental analysis. I am interested in hearing your thoughts. Cheers
Price action alone has no real meaning without a context. Drawing trendlines and watching how traders react to those lines can have some significance. Most traders who use an indicator of any kind use a price action trigger to enter the trade. So to answer the question I don't think there could be any proof to be had to show that TA is any better than FA. If there were a quantifiable TA pattern, that would be considered a perfect trade. But if there were any such thing as a perfect trade, who would take the other side of it?
If you are good at something, never do it for free--Joker
  • #13
  • Mar 21, 2017 2:30am Mar 21, 2017 2:30am
Quoting guybaker
Why restrict yourself to one kind of analysis? All the matters is that you find an edge, test it and exploit it.
It's called discipline with your system
Risk comes from not knowing what you're doing.
  • #14
  • Mar 21, 2017 2:44am Mar 21, 2017 2:44am
Quoting smash1820
{quote} I mean anything and everything you find sufficient enough to be proof. Personally, I don't care much about the "why", but only the "how".

With enough data, it is possible to show that some setups have a significant statistical probability of the market going one way or the other.

I have two systems, one for Binary forex and one for EURUSD Spot, my Binary system has a win/loss ratio of 60% the Spot 57% (equal stop and target), Binary tested back to 2008 Spot 2003. Binary traded forward since December 2015 with essentially the same win/loss ratio, Spot system is in forward testing now.

For me it really is about using a lot of data and a computer to test it. Manual back testing is worthless because of confirmation bias. In both of my systems 10,000+ setups were back tested, and I recommend a further 1000 forward before using significant money.
I live entirely from the growth of my personal trading account
  • #15
  • Mar 21, 2017 2:47am Mar 21, 2017 2:47am
Quoting dragonexpert
{quote} It's called discipline with your system
What has methodology got to with discipline ?
I live entirely from the growth of my personal trading account
  • #16
  • Edited 9:10pm Mar 25, 2017 8:50pm | Edited 9:10pm
Fundamental analysis is guessing what people will do before they do it. No one has the actual data ahead of time, so LOL, how can any logical person risk their money? It is good for trader salesmen who are using other peoples' money and wannabes who never bothered to learn math and economics. Just place some pending stops on both sides of price, calculate some fantasy take profit, and roll the dice. Bet on red or black, lol, and hope they don't swing the market both ways this time before you hit your made-up, based on nothing, target.

Technical analysis is measuring the behavior of the people who put their money where their mouth is. It measures what actually happened and is happening. No one makes money on fantasies. No one makes money trying to trade yesterday's/last week's/last month's trades either. You can, however, make money on reality. If you are not measuring the real market movement, as it is happening, then you are not trading. You are gambling. During news releases, simply sit out until the gamblers get their money stolen, then return to measuring human behavior and making money.

Anyone with a brain understands odds, so what is there to prove? Want to make money? Trade in the direction price is moving. DUH. How? Use math to determine the buying/selling power and track it as it is happening. How? Just like any other business in the world. Find your break-even point and use it to determine market direction. In trading, you get to make money on each side of break-even, so it is twice the potential of a normal business. Ridiculous argument.

The market moves by activating pending orders on both sides of the market. It gravitates to the larger orders in order to fill them, then takes the opposing smaller ones to fill them too. Since you have no clue which one will be filled at any given moment, you are stuck with grouping them into an average. Then, simply trade with the side that is above or below the average. In normal business, the average is your break-even point. Above it is profit; below it is loss. In Forex, it is buy or sell. But, if you are not measuring it, you don't have a clue what to do. Of course though, this applies to professional traders. If you are just fooling around or just taking positions to roll the dice, then none of this applies. Place your bets and Good Luck
You cannot be extraordinary by being normal
  • #17
  • Mar 26, 2017 5:30am Mar 26, 2017 5:30am
Quoting dkrock
Fundamental analysis is guessing what people will do before they do it. No one has the actual data ahead of time, so LOL, how can any logical person risk their money? It is good for trader salesmen who are using other peoples' money and wannabes who never bothered to learn math and economics. Just place some pending stops on both sides of price, calculate some fantasy take profit, and roll the dice. Bet on red or black, lol, and hope they don't swing the market both ways this time before you hit your made-up, based on nothing, target. Technical...
Do you make your living from trading?

I prefer a quantitative approach, something I can test, a coloration between one set of data, however derived either technically or fundamentally, and probable future market movement. I need to be able to see a testable edge in a lot of historical data before I have confidence to run the system forward.

I notice you have read "Think and Grow Rich", do you have a mastermind group?
I live entirely from the growth of my personal trading account
  • #18
  • Mar 31, 2017 1:50am Mar 31, 2017 1:50am
Quoting guybaker
{quote} Do you make your living from trading? I prefer a quantitative approach, something I can test, a coloration between one set of data, however derived either technically or fundamentally, and probable future market movement. I need to be able to see a testable edge in a lot of historical data before I have confidence to run the system forward. I notice you have read "Think and Grow Rich", do you have a mastermind group?
Hello. I do not attempt to know the future, ever. So, I will sit out for major news releases. While I am obsessed with trading, I target the mathematics, not the economics. Economics is too much reading, too much predicting, and too inconsistent for me.

A time frame is just a time frame. That is the second half of the secret to trading. A range on a higher time frame is a trend on a lower time frame. If you want to make money, you trade the trend because it is easier to measure. Historical data is unnecessary because it has already happened. You cannot trade yesterday's trades today, in most cases. Ideally you want to trade the current market, not the one you missed.

There is always more room in a mastermind group.
You cannot be extraordinary by being normal
  • #19
  • Mar 31, 2017 2:43am Mar 31, 2017 2:43am
Quoting dkrock
{quote} Hello. I do not attempt to know the future, ever. So, I will sit out for major news releases. While I am obsessed with trading, I target the mathematics, not the economics. Economics is too much reading, too much predicting, and too inconsistent for me. A time frame is just a time frame. That is the second half of the secret to trading. A range on a higher time frame is a trend on a lower time frame. If you want to make money, you trade the trend because it is easier to measure. Historical data is unnecessary because it has already happened....

If you do not use historical data to test your strategies, how do you gain confidence that your systems works?
I live entirely from the growth of my personal trading account
  • #20
  • Edited 3:55am Mar 31, 2017 3:43am | Edited 3:55am
Quoting guybaker
{quote} If you do not use historical data to test your strategies, how do you gain confidence that your systems works?
Good question. I used historical data to test theories. If they looked appropriate, then I would use months and months and months of demo trading the live market across multiple currencies to fine tune it. My objective was consistency. It took a long time because I kept trying to improve the precision using the live market. I spent free time reviewing and creating better ideas, but always tested them live to be sure they were accurate. When I finally got to the point where the precision broke, I knew where to reverse it to. I found that quite often what looked good in history did not work in the live market. So, it was time consuming, but there is no other way to really know. The objective is to make money and keep it, so a little more time investment to gain consistency and confidence is worth it. After all, you only make money by pulling the trigger, and being right, in the live market
You cannot be extraordinary by being normal
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