How effective is technical analysis, really?

Discussion in 'Stock Market Education' started by vennybunny, Oct 5, 2014.

  1. Onionman

    Onionman Senior Investor

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    It's probably a bit more effective for forex than equities. But part of that is because I just see it as a self-fulfilling prophesy. The market is simply following the same gauges. There are some basic metrics that everyone looks at and then there are the more complex ones which the 'smart' technicians follow. I'd stick to the simple stuff.
     
  2. Vickeree

    Vickeree New Member

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    I'm a newbie investor in stocks but from what I understand, technical analysis would be much better for short term investments or short term trading (knowing when to buy) while fundamental analysis is more of long term right?
    Please correct me if I'm wrong. I guess it wouldn't hurt to have extensive knowledge on both.
     
  3. voronnorov

    voronnorov Member

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    It is best to work the most primitive technical indicators on large timeframes. This is a mathematical derivative showing the speed of change prices. The higher the speed, the greater the likelihood, that the movement will continue in this direction.
    With fundamental analysis I also use derivatives or speed of change of the fundamental financial parameters to assess future liquidity of the company and, accordingly, dividend opportunities.
    Apologies for the English. I study.
     
  4. Colebra

    Colebra Well-Known Member

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    One of the best questions asked on this forum, with equally awesome answers!
    I'm inclined to think that my time is best used studying fundamentals at this point, but as it is the case for almost anything in life, I guess having the best of both worlds can only make us excel.
    But seriously, those graphics just look horrible :p
     
  5. kirtimeliwal

    kirtimeliwal Active Member

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    Technical analysis is basically a research technique that allows you to identify trading opportunities in market-based on the actions of market participants. The various moments of markets can be determined with the help of the stock charts.
     
  6. Chartman

    Chartman Active Member

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    I think TA does have a place as a share price graph can and does often reflect news which is "not in the public domain". I tend to think of markets as information exchanges - all of the info/views go in and a price is arrived at based on this info.
     
  7. gowiththeflow

    gowiththeflow Senior Investor

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    Is some ways technical analysis is a self fulfilling prophecy - if enough people believe in it then it can impact price trends.
     
  8. longtermbull

    longtermbull Administrator Staff Member

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    Don't ignore technical analysis but don't depend upon it - it is a useful tool but one of many.
     

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