I feel Technicals and Astrology are similar to a great extent. Both of them try to predict future based on charts. If gone wrong, proponents of both say that charts already hinted in advance and it was YOU who failed to interpret it correctly.
Anybody else also feel the same?
Technicals is a broad term, plenty of things likely do not work and they perhaps have something in common with astrology. There is no basis in reality for astrology, only irrational beliefs and sentiments leftover from medieval times. When something works you will say its astro, if it does not then faulty reasoning like you said. Same way if something good happens to you then thank god but if something bad then it must be your fault, your sins.
So above reasoning is pretty much wrong and generally spread by gurus who themselves are not profitable. If anyone says that in terms of trading either he does not understand himself or he is deceiving you.
You can can do everything right - everything - and then lose continuously and vice versa. You can do something horribly stupid and make money too.
In short term, there is no edge, only luck. Uncertainty is integral part of trading. Trading works in probabilistic way, you take many bets, some you win some you lose, eventually you make money - if you have an edge. Law of large numbers works here. Luck plays a large part in trading, esp in short to medium term and skill/edge takes time to show up.
Read up this and watch the video from Mauboussin. This kind of thing is even more relevant in investing where it will be very hard to distinguish between skill and luck until you have a very long term track record through multiple market cycles.
Some more relevant posts.
I did not understand these things too initially, learning from traderji âgurusâ and others. Some used to just draw lines after trend days and show how easy it all is which is deceptive. Only when i had an edge did i actually begin to understand how it works, odd but thats how it worked out âŚ
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Both technicals and astrology gives you a probability of an event happening not a certainity. Just because something is based on probability it doesnât become invalid. Its about getting the perspective aligned to the probabilistic reality of our world. E.g :-
- Probability of rain at a place at a certain time
- Probability of finding an electron at a point in space
- Probability that I sent an information bit from point x and receive it intact at point y.
- Probability that x / y ICs turns out alright in a semiconductor foundry process.
- Probability that a polio vaccine shot doesnât cause polio
- Probability of a genetic malfunction passing on from parents to kids
- Probability that an asteroid may not hit and anhilate our existence
- Probability that one threw a dice and it came out to be six
etc etc etc
There is a reason why we study probability in school. Same probability can be equally applied to in stock market.
read Taleb
Cart reading or Astrology is not Science but Art. Astrology or Cart reading is art of observation as it takes only few variables into account( hence simplify things to very much extent) as compared to science or Maths which wants to cover as much variables as possible to come to exact conclusion or results. Science makes things complex than art but science is much more accurate than art.
As in Stock market there are too many variables to comprehend ( some variables cannot even be quantifiable) hence we apply art form called technical analysis because there is no other way. Fundamental analysis can be applied but due to so many dynamic variables ( some variables cannot even be quantifiable like sentiments/policy) we due to ever changing numbers/news flow, Technical analysis works if applied with other data, but again not 99-100% .
But there are investors who make their decisions solely on the basis of fundamental analysis
Yes , but fundamentals changes overnight(+ve /-ve) with policy/news etc. Thats why is highly dynamic in nature and not easy to capture fully. Thats why Fundamental(science) + Technical(Art) works best in combination
I donât agree. Itâs very rare that fundamental changes overnight.
On the contrary, technical are like chameleon. One news is enough to change the trend overnight and technical will start showing opposite of what it was showing some time back
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what i meant about the fundamental is in relation to trading and investing which is hard to capture using fundamental alone. Eg: RBL bank was showing technically weak before news broke out on 25th Dec eve about the MD resignation. So fundamentals(Management) changed overnight but you canât capture it while technical you ,might have judged before hand due to its weakness. same way happened with other news etc, Same way any change in fundamentals canât be captured while Technical (price actions) will show you before even news broke out. Again , its very subjective topic and depends upon time horizon etc. Also , investing is also subjective topic in relation to capital,time frame etc.
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I believe that when you are a short term trader, you donât really need to look at the fundamentals. The overview of the market movements is enough for you to make your trading decisions. But whenever you have time to analyse the market more deeply, you can check the fundamentals and make use of them along with your technical analysis to make better trading decisions.
WD Gann would have chosen Astrology
definitely true
but Gannâs work goes over my head, feels bogus
Not only Gann, all the technicals, charts go over my head. Iâm more comfortable with fundamentals
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I canât think of anything better than price charts. They are readable and share all the information you need to make your trades. Technical indicators often end up confusing me.
While technology is the base of any kind of analytical outcome, we must also be open minded to understand that astrology is predicting the future of a particular situation that may or may not. The uncertainty that lies in that is the same in the market environment. We have to be smart enough to know whatâs right and wrong and make our investments accordingly.
Predicting the market is never going to be an easy task. Technical analysis serves as a tool to make predictions based on the knowledge you already have. It will be hard for a beginner to make accurate predictions. But I think you will get better at interpreting the charts as you gain more experience. In the end charts are just the visual representation of the real time market scenario, whether you trust it or not.
Itâs not Technicals vs Astrology.
Technicals are Astrology.
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You havenât made any good money right.