For Riders2010,
Full disclosure, I don't do any complicated TA myself, but I follow many who do.
First off, as Wheatking said in a previous thread, there is no silver bullet, and logically, there can't be one single indicator that just works every time, because if it did, everyone and every computer would figure it out, and what everyone knows, isn't worth knowing. The move would be over before it even started.
To me, TA is simply a way to attempt to quantify human emotion. Our emotions of fear and greed being quite predictable.
I suspect we can all relate to the sick feeling we get when we sell and the next day the price goes limit up, or panic sell at the very bottom. Or kick yourself forever more for not buying that piece of land that was too expensive at the time. These events leave nasty scars, and no matter how disciplined we are, they affect our future decisions. We remember our successes and assume we are invincible only making us more and more greedy. Analysing a chart is trying to analyze at what point the buyers and sellers were greedy or fearful, and predict at what points they will do so again, or when they will trade places.
The best example would be missing the opportunity to sell at the top (of what will become the range, but that can't be known or knowable yet) , then getting another chance, and being slightly too greedy, so when the third chance comes along, we have learned our lesson, and everyone is ready to sell at the top of the range, for fear of losing out once again, fear wins over greed. So there becomes huge resistance to going above that price. But if the demand is strong enough that buyers consume all of the offers at that resistance, buying everything that the sellers regretted not selling on the last two opportunities, and have to bid higher, there is far less volume of sellers above that point, because the fearful sellers already sold out, and the few greedy sellers who were holding out for a little bit more, now get even more greedy. Then the previously greedy buyers who missed out because they were expecting the previous pattern to hold, become the fearful (end user, has to have the product at any price), or greedy ( speculating on even higher prices) and compete for the dwindling. Whereas if the buyers didn't run out of willing sellers at that price, and the price doesn't break above the resistance, then buyers get greedy and the sellers get fearful. As the sellers who got too greedy at the top, now have to pile in on the way down, while the buyers can sit back and wait for the price to come to them.
Which is my long winded way of explaining what was meant by Bullish above, and bearish below. No one can know if the price will break through that number, but it if does, it will keep going, and if it doesn't, it will fall. Which is absolutely useless information unless you are flexible enough to wait and see what happens. But it will give a good idea of what to expect if a certain event happens, based on our collective emotional response in previous similar situations. Turning points above or below that number are probably just noise.
I suspect you could save all the effort of studying TA, and just study human emotions and end up at the same place, without having to translate it all through numbers and lines on a chart.
You would think that we would learn our lessons and not repeat the same mistakes, but bubbles keep happening, we still get the most bullish at the tops, and most bearish at the bottoms. We still project every trend indefinitely into the future as if cycles don't exist. We still hear about Joe Blow making millions investing in bitcoin/tulips/dotcom/real estate etc. and throw all logic out the window to do the same.
Full disclosure, I don't do any complicated TA myself, but I follow many who do.
First off, as Wheatking said in a previous thread, there is no silver bullet, and logically, there can't be one single indicator that just works every time, because if it did, everyone and every computer would figure it out, and what everyone knows, isn't worth knowing. The move would be over before it even started.
To me, TA is simply a way to attempt to quantify human emotion. Our emotions of fear and greed being quite predictable.
I suspect we can all relate to the sick feeling we get when we sell and the next day the price goes limit up, or panic sell at the very bottom. Or kick yourself forever more for not buying that piece of land that was too expensive at the time. These events leave nasty scars, and no matter how disciplined we are, they affect our future decisions. We remember our successes and assume we are invincible only making us more and more greedy. Analysing a chart is trying to analyze at what point the buyers and sellers were greedy or fearful, and predict at what points they will do so again, or when they will trade places.
The best example would be missing the opportunity to sell at the top (of what will become the range, but that can't be known or knowable yet) , then getting another chance, and being slightly too greedy, so when the third chance comes along, we have learned our lesson, and everyone is ready to sell at the top of the range, for fear of losing out once again, fear wins over greed. So there becomes huge resistance to going above that price. But if the demand is strong enough that buyers consume all of the offers at that resistance, buying everything that the sellers regretted not selling on the last two opportunities, and have to bid higher, there is far less volume of sellers above that point, because the fearful sellers already sold out, and the few greedy sellers who were holding out for a little bit more, now get even more greedy. Then the previously greedy buyers who missed out because they were expecting the previous pattern to hold, become the fearful (end user, has to have the product at any price), or greedy ( speculating on even higher prices) and compete for the dwindling. Whereas if the buyers didn't run out of willing sellers at that price, and the price doesn't break above the resistance, then buyers get greedy and the sellers get fearful. As the sellers who got too greedy at the top, now have to pile in on the way down, while the buyers can sit back and wait for the price to come to them.
Which is my long winded way of explaining what was meant by Bullish above, and bearish below. No one can know if the price will break through that number, but it if does, it will keep going, and if it doesn't, it will fall. Which is absolutely useless information unless you are flexible enough to wait and see what happens. But it will give a good idea of what to expect if a certain event happens, based on our collective emotional response in previous similar situations. Turning points above or below that number are probably just noise.
I suspect you could save all the effort of studying TA, and just study human emotions and end up at the same place, without having to translate it all through numbers and lines on a chart.
You would think that we would learn our lessons and not repeat the same mistakes, but bubbles keep happening, we still get the most bullish at the tops, and most bearish at the bottoms. We still project every trend indefinitely into the future as if cycles don't exist. We still hear about Joe Blow making millions investing in bitcoin/tulips/dotcom/real estate etc. and throw all logic out the window to do the same.
Comment