Is Technical Analysis a fraud or not? - Starting experiment
In the past year or so I've read 4 books on the subject of Technical Analysis. I think it could be a complete fraud. But there's a large cohort on twitter who seems to swear by it. The "Chartists" as they call themselves over there. These people tend to shy away from the theory of rational expectations and choose to use more technical indicators like moving averages or the ichimoku cloud to try and predict future price movements.
However, those individuals never do two things:
Make any firm, testable, prediction of future price. The theory is there are "probabilities" associated with each chart formation, but they always fail to really assign any actual probability to them. For example, if we see a ascending triangle, this chart formation, has a 95% chance to be higher in 24 hours.
Compare past performance and trades. They should be doing that! However, they likely do that privately rather than publicly. And my guess is that it's pretty abysmal results.
And one final note: Most of those "Chartists" are always trying to up-sell their followers into a "master class" or a "private group" where they teach you their strategies. The thing that comes to mind is "Those who can, do; those who can't, teach"
So after reading books on the subject, I'm going to try my hand at it.
BUT, I'm planning to post daily or nearly daily with:
A TA of my own on Steemit/dollar from Bitmex using trading view and the ichimoku cloud as my indicator - with maybe one or two others like an RSI or something.
A testable prediction of where the price will be in the next day.
A running tally of how those predictions have turned out.
This way, I can come to my own conclusion, and perhaps create a verifiable account of TA actually working or not. Personally, I think it won't. I subscribe more to the random walk theory but I'm open to being wrong. And, if TA does actually work. Then it would be amazing to get feed back from other TAers and Chartists on this platform to improve my own TA.
Either way, I'm going to start this process tomorrow and continue it until I get tired of it or until we get some interesting findings.
Anyways, hope you enjoyed!
The books I read to prepare me for this (Amazon affiliate links): I'd suggest not buying those until we reach a conclusion of the experiment ;)
Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods
Getting Started in Technical Analysis
The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading Strategies
If you liked this content feel free to reblog, follow, and comment.
Who is klabboy?
I’m different than some steemians. I have never been be paid to create content (baring likes from fellow steemians), I have never paid for upvotes, and all my content is 100% created by me. Nothing fake, no agenda, just my thoughts, and your comments.
Further, I’m a stutterer, crypto-enthusiast, economics student, data nerd, and outdoors lover. I post mostly on economics, data, personal fun/stories, and crypto. If you have an interest in those things and the occasional random topic, feel free to like, follow, and reblog my content. Hope to hear from you in the comments! Have a wonderful day!