Reading Assignment: Reading Assignment: Does Technical Analysis Work?

TA & Algo Trading Course
#161
  1. How does the writer define technical analysis?
  • Technical analysis is "the practice of analysing the price and history of an instrument in order o make actionable, risk-defined forecasts of its future price.
  1. What are technical analysts looking to identify in the market?
  • “probabilistic, actionable and risk-defined set ups on an instrument”
  1. How would you summarize the authors argument that technical analysis works?
  • the requirements to meet [the above definition] to be true are not unreasonable." TA “does not predict the future of price, if it helps traders identify and trade asymmetric risk:reward trade set ups, it works.”
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#162

  1. 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.

  2. Technical analysts are looking for better odds and for their setups to render them profitable over enough trades with asymmetric Risk-Reward Ratio.

  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.

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#163

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 Identify and execute a trade setup offering asymmetric Risk:Reward (reward greater than the risk taken).

3 Technical analysis helps traders to identify profitable moments and entry points while at the same time keeping an eye on the risk and reward ratio.

#164
  1. technical analysis is a probabilistic risk management tool that can
    i) generate new trade ideas
    ii) convert price forecasts into actionable trades
    2.Identify trading opportunities that maximize the profit while maintaining a level of risk they are willing to take
  2. Technical analysis can’t read the future but will help find patterns and reduce your risks of trading in an asset.
#165

  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.

  2. What are technical analysts looking to identify in the market?** Asymmetric risk/reward trade setups

  3. 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 aren’t to predict the future or that it must outperform better-equipped professionals. As long as it helps traders identify and trade asymmetric risk/reward trade setups, then it works.

#166
  1. Technical analysis is a risk management tool whereby through it’s use a “technician” can derive risk-defined setups that are also probabilistic and actionable; rather than merely “predicting future price”.
  2. Actionable, risk defined trade setups that are supported by fundamental research. Technical analysts are also looking for entries on assets (depending on the direction of their theses) which their being watched is determined through fundamental research.
  3. The author made a point to stress that Technical Analysis (TA) is NOT merely predicting price action and forecasting where the movement is going to. They state that TA is not to be used exclusive of Fundamental Analysis (FA) and that when used properly (by analysts that are disciplined, systematic, etc.) they work; at least so much greater than the “analyst” that merely takes a quick shot at it.
#167
  1. How does the writer define technical analysis?

To make it short, he defines it as a risk management tool that will guide you to take probabilistic , risk defined actions when preparing your trade strategy.

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

They look for patterns in the price history of the asset on a long and short period of time.

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

Technical analysis works as long as :
The trader focus on his customized trade goal,
The trader has discipline and patience
He does not compare to big traders firms because the tools or info he might get might be the same but the context is different. It’s not the same to create a trade strategy with your own money than doing the same with your customer’s money.

#168
  1. How does the writer define technical analysis?

The writer defines technical analysis as the practice of analysing the price history of an instrument in order to make actionable, risk defined forecasts of its future price.

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

Technical analysts are looking to identify price trends which have a historic pattern which tends to repeat which can be used to set up trades.

  1. How would you summarize the authors argument that technical analysis works?
    Technical analysis, if disciplined and systematic, simply gives an edge on what the probability of a certain outcome is. Fundamental analysis can be complementary to this.
#169
  1. How does the writer define technical analysis? A risk mgmt. tool used to understand probabilistic, actionable, and risk-defined trading setups on an instrument
  2. What are technical analysts looking to identify in the market? Trades that offer an asymmetric risk:reward
  3. How would you summarize the authors argument that technical analysis works? The author believes the success criteria for TA is within an attainable level by an individual with a methodical and disciplined approach.
#170

1 ) How does the writer define technical analysis?

Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity

2 ) What are technical analysts looking to identify in the market?

We are looking for past market data , price movement, charts, trends, trading volume and other factors.

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

TA works if you put in the time , effort and discipline in order to use it . It is NOT a crystal ball that predicts the future , but it can be used as a tool and gives you an edge on where the market might be heading.

#171
  1. he defines technical analysis as a rik-managing tool, to decide what next steps one might want to take. Its not a “crystal-ball” for guessing future prices, but can help to get an idea about a future trend. As economics in general, its not a science based on logic, but a way to deduct future trends from the past. (also, does not work really under present “unprecedentet” situatiion of stock-market now in 2020 - eveny analysts dont really know what to make out of it…)
  2. looking for which volume was traded at a certain day, highs & lows, did it close low or high - and what this can indicate. To “outperform” all these professional traders, especially the “high frequency trading” supported heavily by huge computers (BlackRock…) is an illusion. Nevertheless: even these guys have to get some input in their algorithms to make it work, most likely also based partly on technical analysis. Therfore: one has a chance to reach one´s personal investment-goal by using better tools.
  3. It works - but it depends who is working with it. Indivudual characteristics like patience, not becoming too greedy or nercous plays a big role in who to apply these instruments for a succesful investment. Its not for “crazy gambling day-traders on amphetamine…” - also they might use it, but still come to wrong conclusions After all, fundamentals are also highly important to include in the process - as we know from the “dot.com-bubble”, and whats happening now on the stock-market. Its not all “priced-in” already - a good company, producing value, with a great company-culture and offter a solution on high demand might outperform on the long run, even if their “technical” datas do not look promising at first glance. Both methods have to go together for a good decicion. If one is not really convinced fully: put on the watchlist, and see what is going to happen - and only act if the trend is clear (at least for you making the decision :slight_smile: Thats how I think, like the author says as well.
#172
  1. He would argue; Technical analysis as a risk management tool to derive probabilistic, actionable, and non-defined trade setups on an instrument, instead of only analyzing price history for instrument future price knowledge.
  2. Technical analysis identify a trade setup offering asymmetric Risk:Reward in the market.
  3. Technical analysis works when it helps traders identify and trade asymmetric Risk:Reward trade setup. It doesn’t have to forecast the future or outperform a better equipped professionals.
#173

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. Technical analysis is probabilistic, not an exact science.

What are technical analysts looking to identify in the market?
Technical analysts are looking for better odds and for their setups to render them profitable over enough trades.

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.
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#174

  1. How does the writer define technical analysis?
    The study of price history and action using elements to make risk-defined predictions of future price action.

  2. What are technical analysts looking to identify in the market?
    Probability of price action

  3. How would you summarize the authors argument that technical analysis works?
    TA functions by producing asymmetric risk to reward of the future price moves

#175
  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.

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

Technical analysts are looking to identify trends in an instruments price history that might give them a slight edge when trading.

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

That technical analysis will not predict the future. It is a risk management tool that should personal to you and your needs that might give you an edge in knowing where your personal targets might be realized with dedication and a proper plan.

#176
  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 .

The practice of analyzing the price history of an instrument in order to make actionable, risk-defined forecasts of its future price .

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

Previous historical levels where the price has reacted before, and probably has a greater than 50% chance to react in the same way again.

Levels to buy/sell depending on technical indicator setups often combined with volume read, but also levels for putting stop loss and take profit.

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

There are plenty of professional traders who use technicals in their trading one way or another, and this will also work for disciplined retail traders who only do a few of the best setups combined with good risk/reward.

Retail traders have lower costs and only needs a small profit to do well, they don’t need to outperform professionals, only grab a bit of the move.

#177 
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.”

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

Technical traders looks to identify and execute trade setups offering good asymmetric risk:reward, aiming better odds to render them profitable over enough trades.

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

It works if traders are disciplined, systematic and combine proper knownledge in TA with FA, together with a good risk management and the right mindset.

#178

  1. the utility of technical analysis is best summarized as follows: Technical analysis is a probabilistic risk management tool that can i) generate new trade ideas ii) convert price forecasts into actionable trades.

  2. What technical analysts are looking to identify in the market are better odds and for their setups to render them profitable over enough trades (over time).

  3. Summarizing 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. It’s much more likely to work for someone who takes it seriously (disciplined, systematic, etc.) than someone who just takes a punt.

#179

  • How does the writer define technical analysis?
    A: 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.

  • What are technical analysts looking to identify in the market?
    A: Trade setups offering asymmetric Risk:Reward.

  • How would you summarize the authors argument that technical analysis works?
    A: Technical analysis is much more likely to work when the trader is systematic and disciplined.

#180
  1. How does the writer define technical analysis?
    " Technical analysis is a probabilistic risk management tool that can generate new trade ideas and
    convert price forecasts into actionable trades."
  2. What are technical analysts looking to identify in the market?
    Technical analysis is a risk management tool that can be used to derive probabilistic, actionable,
    and risk-defined trading setups on an instrument.
  3. How would you summarize the authors argument that technical analysis works?
    Technical analysis is not about knowing and 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.