Quote from: unclejed613 on February 10, 2014, 04:23:40 AM

technical analysis can give you some basic idea if there are cyclic variations, and some idea what's " normal", but without qualitative analysis, yes, it's voodoo.... for instance, i have been sitting on 8 sell orders of 1000dvc each for about a month. while the normal trading range seemed to be dropping (the voodoo would have said to cancel my more ambitious orders, and cut my losses) i just let them sit... sure enough, DVC went up enough to execute 4 of my sell orders (with about 30% margin) and am within "spitting distance" of 3 of the other 4. you see, the qualitative part of the analysis had a press release a couple of days ago, plus a new influx of writers just before this round's deadline, plus the start of a new round... so i hung in there rather than cancelling orders that the "voodoo" would have indicated cancelling....

There's a difference between indicators reflecting price patterns and momentum (e.g. moving averages, rsi) and others constructing forward looking trades. In my experience patterns are important, as are psychology and herding which TA can reflect, but I think it's self-perpetuating. There are some markets where TA seems to work better, FX is one of them and particularly in short term charts. For example if trading interest rates then USD/JPY charts help, but I see that as price reflection with an obvious inter-relationship rather than anything else.

So I said voodoo partly just to be provocative and partly because I do think it's an eternal fruitless quest to wrap mass psychology in an indicator. But I still use it as a tool because sometimes it helps, I'd just never actually trade off it mechanically. I've written articles on TA so not slating the concept only how it can be applied as more than retrospective.

I'm also not a massive fan of qualitative analysis as it goes. Again it's a tool, because it doesn't really matter what I think, it's what everybody else thinks and does. I tend to look at relative value where possible, or momentum and sometimes just gut feeling. Risk management is probably the most important thing - more often than not flipping a coin and having the discipline to cut losses quickly and let gains go works, but mentally that's very hard to do.