Staff -
Just because you don't want to (or haven't learned how to) use technical analysis in your own investment/trading system, DEFINITELY does not mean that it doesn't work! It only means that it doesn't work for YOU!
Ok, I won't spend any time defending Fibonacci cycles and some of the other more arcane tools/techniques... after all, I would agree that within the realm of what's called 'technical analysis', there IS some stuff that smacks of voodoo!
A particular technical analysis technique is only as good as the underlying assumptions BEHIND the technique. Classical techniques work because the assumptions around support/resistance levels are sound. The MACD technique works because it is a sound assumption that price ACCELERATION, if prolonged, will lead to price VELOCITY, and VELOCITY, if prolonged, will lead to upward, sustained, movement (PROFIT). Now, a Fibonacci sequence applied to a stock? Maybe to nautilus shells, or sunflowers, but...
Good TA techniques, used correctly, are not going to allow you to execute 100% winning trades. But, they do allow you to gain for yourself a higher BATTING AVERAGE... which ain't a bad thing to have!
Over the last several years, I've designed, backtested, and used very well defined trading systems, so well defined that they are essentially 'cookbook' methods. These systems involve a combination of fundamental analysis, technical analysis, and some very basic buying/selling rules (e.g., stop orders). I have tested and used them over a wide range of market conditions, types of stocks, etc. I have ZERO doubt that they work!
Now, if you can't handle winning ONLY PART OF THE TIME, well, then... TA is NOT FOR YOU! Great! Don't use it! But if you are ready to take some of the emotionalism out of your trading, I suggest you really learn about TA and apply the techniques ALONG WITH good fundamental analysis. I think it will work for you, then.
Loren |
