>>> Don’t bet the rent on technical analysis <<<
HAR, HAR, HAR!
As if technical analysis consisted of just a H&S pattern. Patterns are nothing more than road signs. You don't drive down the road and only see yield signs. There are all sorts of signs to keep traffic flowing, as there are many different technical indicators to keep an investor flowing without too much harm.
When you come across one of these road signs, H&S pattern, cup and saucer, rising triangle etc., you then look to your oscillators and other technical indicators for confirmation.
The value of TA is in it's timing, but timing doesn't mean anything if the investor doesn't use good management principles to help that flow of information. When the technical indicators flash a buy signal and the price turns opposite your call, you must cut your losses very short, (I use 3-4%), and wait for the indicators to line up again.
Articles like the one Niederhoffer wrote does a disservice to people, in my opinion. How can anybody succeed by focusing on one segment of a strategy? We can look to the world of sports for inspiration on how to approach the world of investing. The winners have a good offense and a good defense. You don't win championships unless you are effective with both offense and defense. The same thing with investing. Anybody can go on offense, but it's the defense that separates the winners from the losers. The advantage of TA is that it lets you know with accuracy, when it's time to go on offense. If you're wrong, you'd better have a good defensive game plan.
da-coach-bum |
