Technical Analysis: Why it Works and its Limitations - YouTube

Sure

Technical Analysis it Works for me certainly but I've selected the elements that I believe work and it does have limitations and

There are certain aspects of technical analysis that I

Largely leave aside entirely and are critical of

I feel

This is quite controversial as

Well so i feel one of the key Things People get Introduced to in technical analysis they get straightaway taught

Indicators and

They Get Taught Moving Averages

They Get Taught a Variety of what I call the lagging Category of derived Lines

So Essentially Price Data

Which is the facts and the [truth] and The Reading of the tick Is

Being De-Emphasized and often I find Early Traders will have you know Price Chart Here and Then

Two Thirds of The Chart will Be Filled With five or six

Derived Lines Which are Essentially Mathematical Formulas Placed on Different Points of the Price Data and

There's Nothing Predictive About that but what Tends to happen is People Begin to Make Association

Psychologically That There's A predictive Element in Fact Most of the ticks Up in the Indicator will always be Generated by first to tick in

The Price so Inherently Most in Most [Indicators] are Lagging and

Everyone will Say Up but you've Got the Warning There

Retrospectively When you move the point

That You draw, the line Up on the Indicator Actually Looks like it gave Early Warning but Only after the Price

Data has moved it has it done so so people get Confusing They start to think the tail Is wagging the dog

The Price Behavior Is your best and Should be your Primary Part of your analysis

And I feel Personally that's There's too much Fascination on Indicators the other Thing that is wrong With Indicators for me Is that

Invariably People Get Into the Habit of Calling Tops and Bottoms so if you have A Rsi they Say up there's

Divergence it's not Going up as, Quickly

Therefore it's Losing some [of] its Momentum but Actually if You've Had A very Strong impulsive Move on the Price any

Move up after that will Look, less

Significant However You Can Go, Into A trend for A very Long Time so it has People Always

Taking The other Side of The Market in Terms of the Trend so it actually Encourages not Following the trend and

so Those Elements I'm very Critical of volume is a notable Exception volume Can often precede Price Moves and I value that and

Things Like Bollinger Bands That Capture Volatility and Because I

Trade the expansiveness of The Volatility and The Tightening of the

Volatility as Part of my Strategy I find Things that Illustrate That very very useful so it's not a Broad Brush but Most Indicators

Unfortunately

Have Limited Value in Technical Analysis and I wish that the I wish the Art or the Science

Emphasize Them A far less I think it's Killing A lot of Traders

Future and Leaving Them Feeling A bit helpless what are the good Sides of Technical Analysis that I use Certainly patterns

so patterns Capture

the

Footprints and Dna of A Crowds Response To a Certain Set of impulses so you, get News it's either over Hype

Or it's under Hype it's but good, or it's Bad you patterns Continue to Form and

People's Human Reaction to Those Patterns Are Generically always the Same it's Quite

Incredible [That] for Me and that doesn't Matter who the participants are in The Crowd but if We Shout fire

Everyone will Scrum Down at the door to get out the fact that if We all

Jumped Into Two Orderly Queues and Just [Rifled] Through the door

We could empty the cinema A lot Quicker [Does] not Change that People's emotional and Psychological

Response will Be Wrong and it [doesn't] Matter if They Nuclear scientists and Brain Surgeons in The Crowd the emotional Response and the Psychological

Responses will be the Same so and I often Use in my trading if You've Ever Seen a shark, We have the big?

Sardine Run in South Africa if You've Ever Seen a shark Going a shoal of Fish

Doesn't Matter who the individual participants Are that Fish are There Create This Lovely two meter Two and a half Meter Tunnel Around

Him you know He's the Predator and

They're All Moving and They're all Hustling and They all know There's a shark They and They're all Keeping a Distance but There Seems to

Be this Artistic Perfect Pattern Around [him] that is formed no one Person is coordinating this but it's Almost

Perfectly Constructed

And this Is this is the effect of Crowd and and and an Impulse

An Effect a danger Or an Opportunity

And we get this Repeating Time and Time again so patterns have a high Probability of occurring?

Generally However

The Best Patterns are the Continuation Ones so things That Call Turns Can be Incredibly Profitable but in Most instances

Things Continue So i place A greatest Emphasis on Continuation

And what About

Fundamental Analysis

do you use that

so Fundamental Analysis I have

Solve Around here Somewhere I say Is just the other Half of?

The other Side of the Same Coin

so I think

The Notion That There's These Two Competing Parties The one Versus the other

Is a foolhardy Notion, we are the same Coin in fact

Technical analysts Aren't Following the Lead Steers

Fundamentalists so When Something Suddenly that's Been Going down Suddenly has High Volume and Starts Trading up

Subsequently and Then Becomes Impulsively Strong and Then Technical Animals Start Getting Involved, They are Jumping on the Coattails of

the Lead Steer

Fundamentalists who Have Said This Particular Equity Is not Worthy of being

Slammed so the People in Their bowler Crisis when it

was at its Peak of Hype and the Airlines were all Selling Off and We looked at this

We said Really Is This The end of The World Come on?

Scanning Things are Going to be put [on] the Airlines

Or We're Going to have all These extra costs This has Been Overplayed

Overhyped The Media Are Getting Ahead of Themselves The Value Money Starts Buying the Airlines what why

Because the Crude Oil is Collapsing and That's one of the biggest input Prices

So you then See that and Technically You get the set up I saw both as a pattern

And I saw the Fundamental Narrative as well

[in] That Instance [I]

Also wasn't Particularly swayed by the the ebola Narrative as being you know a major Thing I've Seen

Swine Flu Bird flu you know the Lot come Through and

I i would be Happy [to] have Been Fundamentally one of Those with the oil Price Showing of Substantial

Form and to have gone Long so that's Where my technical view and A fundamental view Both [marry] so we can't?

The Technical Analyst [Should] Never Be Have an issue With A fundamentalist

Usually However it's the other Way Around [the] others Thing

Technical Analysis Is voodoo science

you