Reading Assignment: Reading Assignment: Does Technical Analysis Work?

TA & Algo Trading Course
#321
  1. “technical analysis is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price .”
    2.Trade setups with risk/reward feedback
    3.Summarized T/A works and assist’s in guiding traders with risk reward
1 Like
#322
  1. Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument.
  2. An asymmetric risk/reward setup that gives them an edge.
  3. first, you have to know what it means for it to work. Based on the definition on point 1, It does. However, the outcome depends on the traders and their strategy.
1 Like
#323
  1. Technical analysis is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price.
  2. Technical traders are using some sort of automated strategy, looking for better odds and for their setups to render them profitable over enough trades.
  3. Technical analysis works because the requirements it has to meet for that to be true are not unreasonably high. It doesn’t have to predict the future, nor must it outperform better-equipped professionals. As long as it helps traders identify and trade asymmetric risk:reward trade setups, then it works.
1 Like
#324
  1. Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument.
  2. Identify and execute a trade setup offering asymmetric Risk:Reward
  3. Technical analysis ‘works’ because the requirements it has to meet for that to be true are not unreasonably high. It doesn’t have to predict the future, nor must it outperform better-equipped professionals. As long as it helps traders identify and trade asymmetric risk:reward trade setups, then it works.
1 Like
#325
  1. Technical analysis is a risk management tool that can be used to derive probabilistic, actionable and risk defined trade setups on an instrument.
  2. It’s looking for better odds in increasing probability of success.
  3. Technical analysis ‘works’ because the requirements it has to meet for that to be true are not unreasonably high. It doesn’t have to predict the future, nor must it outperform better-equipped professionals. As long as it helps traders identify and trade asymmetric risk:reward trade setups, then it works. It’s much more likely to work for someone who takes it seriously (disciplined, systematic, etc.) than someone who just takes a punt.
1 Like
#326

  1. How does the writer define technical analysis?
    It is a risk management tool that is based on probabilities to generate new trade ideas and convert price forecasts into achievable trades.

  2. What are technical analysts looking to identify in the market?
    They seek to identify and execute trade setups offering asymmetric Risk / Reward.

  3. How would you summarize the authors argument that technical analysis works?
    TA will work for the retail trader in spite of the competition. All they need is to focus on their trading goals and profitability. It is not about predicting future prices but there is need for discipline and consistency to be a successful trader.

1 Like
#327

1 Technical analysis is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price.

2 Reoccurring patterns to estimate the probability of a certain price action.

3

  • A risk management strategy
  • A way of getting an edge in the market
  • If used with discipline it may be more reliable than if used ad hoc
1 Like
#328

  1. The writer defines technical analysis as a set of tools to identify asymmetrical risk / reward setups, not as oracle which is able to predict the future.

  2. Technical analysts try to find asymetrical risk / reward trading setups.

  3. The author sees technical analysis as a tool to identify reasonable entries and exits, not as an oracle and wants to trade emotions of others in the market not his own feelings.

1 Like
#329
  1. The author defines TA as a risk management tool that is used to to generate possible trade set ups which:

(a) give probabilities of future price. This is not an exact science but only a probability calculation.
(b)The probabilities must be expressed in an actionable form which includes a risk calculation;
© to have a risk calculation the analysis must include a stop loss and take profit target since these define the risk calculation of the trade.
(d) By defining the risk the analysis is made actionable.

  1. Technical Analysts are looking to identify set ups that are likely to result in a profitable outcome if sufficient trades are made.

  2. The author says TA works because its job is to allow traders to identify and trade on an asymmetric risk to reward set up. If TA does this for the trader it is doing its job and by definition it works.

It is a common misconception that TA only works if it can predict the future or if it can outperform better equipped professionals. But that is not what it is designed to do so we do not use those criteria to determine whether or not it works

1 Like
#330
  1. How does the writer define technical analysis?

Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trading setups on an instrument.

  1. What are technical analysts looking to identify in the market?
    Helps traders identify and trade asymmetric risk:reward trade setups.

  2. How would you summarize the authors argument that technical analysis works?

its a tool that can help guide trade decisions based on a probable but not guaranteed analysis of trends.

1 Like
#331

  1. “Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trading setups on an instrument.” So the key distinction is that it’s not about prediction, but about making guesses that you are confident in.

  2. They analyze the market to find trading opportunities with a good risk/reward ratio.

  3. It works because it gives us what it is intended to do: risk-defined trade setups.

1 Like
#332
  1. How does the writer define technical analysis?

Technical analysis is a risk management tool that can be used to derive
probabilistic, actionable, and risk-defined trade setups on an instrument

  1. What are technical analysts looking to identify in the market?

Be in focus on your trading success. What others are doing is not important as
long as you’re meeting your planned goals.

  1. How would you summarize the authors argument that technical analysis works?

It doesn’t have to predict the future or outperform the pros. If it helps you as trader identify and trade asymmetric risk vs reward trade setups, then it works.

1 Like
#333
  1. How does the writer define technical analysis?
    • It is a risk management tool and it will give a calculated edge and safety towards making your trades
  2. What are technical analysts looking to identify in the market?
    • Patterns and trends, where they need to sell their losses and sell also their wins
  3. How would you summarize the authors argument that technical analysis works?
    • It gives you a calculated edge in doing your trades
2 Likes
#334

  1. The author defines Technical Analysis as a probabilistic risk management tool that can generate new trade ideas and convert price forecasts into actionable trades

  2. Technical analysts are looking to identify actionable, risk-defined trade opportunities in the market.

  3. A lot of people think Technical Analysis doesn’t work because they think its purpose is to help you predict future price action. The author argues that Technical Analysis works because it allows people to identify and trade asymmetric risk:reward trade setups.

1 Like
#335
  1. Technical analysis IS a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument

2.When technicians are mapping out their levels/waves/indicators — whatever myriad of tools they use — the aim is essentially the same: identify and execute a trade setup offering asymmetric Risk:Reward.

3.— Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trading setups on an instrument
— Technical analysis is not about knowing/deducing the future price of an instrument
— The point of technical analysis isn’t to outperform professional desks and firms, it’s about whether it can help a trader carve out an edge and a positive expectancy in the market(s) they trade
— Not all technical analysis is equal — it’s much more likely to work for someone who takes it seriously (disciplined, systematic, etc.) than someone who just takes a punt
— Don’t get sucked into the technicals vs fundamentals argument — focus on whichever works best for you and have at least an elementary grasp of the other
There’re plenty of exciting topics that I haven’t covered (why/how technical levels and tools are respected by the market, what moves price, and so on) but we’ll save those for another article.

1 Like
#336

  1. technical analysis is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price .

  2. technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades .

  3. There are few important facts into his arguments which are important to notice:
    -TA is a risk management tool.
    -TA is not about knowing the future of an asset.
    -TA is about self discipline.
    -TA or FA are not to be argued, whichever suits you best then follow that.

1 Like
#337
  1. The author defines technical analysis as technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades . In contrast to Wikipedia’s definition, the author emphasizes the probabilistic, actionable, and risk-management oriented nature of technical analysis (not a scientific forecast).
  2. Identify and execute a trade setup offering asymmetric Risk:Reward
  3. The author shows that the question is at some extent absurd. It’s more about the trader, his discipline, consistency, analytical skills. Thus technical analysis works only if the trader thoroughly does his homework.
2 Likes
#338
  1. How does the writer define technical analysis?

It is a set of tools that :
(i)manage risk,
(i) construct a probabilistic, actionable setup
to be applied on an instrument

  1. What are technical analysts looking to identify in the market?

Trends that priovide an asymmetric risk:reward

  1. How would you summarize the authors argument that technical analysis works?

That works in the sense that it helps to setup strategies that, with high probability not certainty, produce an asymmetric risk : reward

1 Like
#339
  1. TA is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price.
  2. TA is looking to identify the risk management that can be used for generating new trades ideas and converting price forecast into actionable trades.
  3. TA is the practice of analysing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price.
1 Like
#340

1.) How does the writer define technical analysis?
a.) Technical analysis IS a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument.
2.) What are technical analysts looking to identify in the market?
A.) Technical analysis looks for price patterns and trends based on historical performance to identify signals based on market sentiment and psychology. in other words (opportunities)
3.) How would you summarize the authors argument that technical analysis works?
a.) in my opinion, it is all about risk management and understanding the opportunity when it stares you in the face. the good news is history never lies and never stake more than you can afford to loose, ever, technical analysis or not. :stuck_out_tongue_winking_eye:

1 Like