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.
The aim is essentially the same: identify and execute a trade setup offering asymmetric Risk:Reward.
TA works as long as we use it correctly. It is a tool of probability rather than something that tells the future.
Then it’s described as ‘…a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument.’
Patterns and signals that allow getting into a trade considering possible outcomes based on stats and risk/reward predefined parameters.
Technical analysis is a tool for trading, not a forecasting and magic power.
It can be combined with automated tools and fundamental analysis.
Do a proper and serious technical analysis is essential for exploiting its potential.
The chosen TA strategy should match with the trader’s expectancy.
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.
To outline a target where they wish to take profit or close their trade, and a stop loss where they wish to exit the losing position to prevent further losses.
To sum it up quickly, technical analysis works because your using more than just looking at a chart or taking a wild guess what the market is going to do because you see green because buyers are in control of the day, and throwing your money in on a whim.
How does the writer define technical analysis?
Technical analysis is not about analyzing price history to gain knowledge of the future price. It is a risk management tool that can help derive probable, actionable and risk defined trades.
What are technical analysts looking to identify in the market?
A TA is trying to identify actionable, risk defined trades, have good odds, which will give better profits.
How would you summarize the authors argument that technical analysis works?
TA is not about knowing or predicting the future. TA is not about competing with professionals. TA is a risk management tool to help make risk defined trades.
Technical analysis is a risk management tool that can be used to derive probabilistic, actionable, and risk-defined trade setups on an instrument
Technical traders, irrespective of whether they are discretionary traders or using some sort of automated strategy, are looking for better odds and for their setups to render them profitable over enough trades.
It’s not about predicting the future but identifying and trade asymmetric risk/reward trade setups.
How does the writer define technical analysis?
“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.”
So not just historic price analysis but the lookout for future trades and actions based on risk evaluation i.e. establishing trade set up.
What are technical analysts looking to identify in the market?
Price levels at which to enter and leave a trade i.e. take profits, set a stop loss.
How would you summarize the authors argument that technical analysis works?
Technical analysis can be confused with exact price predictions - which it is not, and that makes some argue that TA does not work. The author states that TA is supposed to assist traders and advise them the best risk-based trade entry and exit levels - and it does that, therefore it works. TA has to be applied correctly and emotions or silly mistakes have to be controlled. If that is not done again it makes people argue against TA.
How does the writer define technical analysis?
technical analysis is a probabilistic risk management tool that can
1 generate new trade ideas
12convert price forecasts into actionable trades
What are technical analysts looking to identify in the market?
help a trader identify a bullish or bearish trends in the markets
How would you summarize the authors argument that technical analysis works?
TA is Good
TA and is all about risk management
Reading Assignment: Does Technical Analysis Work? – Questions
1. How does the writer define technical analysis?
« Technical analysis is the practice of analyzing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price. »
« Technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades.»
2. What are technical analysts looking to identify in the market?
Technical analysts look to identify and execute trade setups offering asymmetric risk:reward ratios.
Irrespective of whether they are retail traders or using a professionally automated strategy, all technical analysts keep looking for better odds to profitably set up their trades over a long enough series of trades (i.e positive expectancy over rimz / more winners than losers in probabilistic terms).
3. How would you summarize the author’s argument that technical analysis works?
It works as long as you remain disciplined and systematic about a technical strategy. If one only aims to take random punts, it won’t prove as successful probabilistically speaking.
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
Asymmetric risk/reward trade setups
ta depends on whos using it and taking it seriously or not the tool is as good as the trader
1. How does the writer define technical analysis?
Technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades.
2. What are technical analysts looking to identify in the market?
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. How would you summarize the author’s argument that technical analysis works?
Technical analysis works because it follows logical sets of requirements that can be achieved with patience and strategic consistency. As long as it helps traders identify and trade asymmetric risk:reward trade setups, then it works.
How does the writer define technical analysis?
Technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades.
What are technical analysts looking to identify in the market?
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.
How would you summarize the authors argument that technical analysis works?
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.
A.1. Technical analysis is risk management tool that can be used to drive probabilistic, actionable and risk-defined trading setups on an instrument. Technical analysis aims to help the trader to carve out an edge and a positive expectancy in the markets they trade.
A.2. Technical analysts look to identify and execute asymmetric risk-reward trade setups and render them profitable over enough trades.
A.3. The author’s position is that trade analysis works but (1) it is not about knowing or deducing the future price of an instrument, (2) it is much more likely to work for someone who takes it seriously (disciplined, systematic, etc.) than someone who just takes a punt and (3) it is important to have a good overall knowledge of both technical analysis and fundamental analysis. These are complementary not contradictory.