I really agree with you relative to the predictive capability of TA. It is nonsense to take what should be a random market place and predict future price action on the basis of history. However, the very fact that enough people believe in this voodoo makes it self-fulfilling in nature. I believe that if you truly understand what the TA gurus are telling everybody relative to the interpretation of the tea leaves, and then do some real heavy reading about the psychology of the market, and the market's traders, you can replicate to some degree what the MMs do to the average traders. I think you have to really understand what the math is behind these indicators (and it ain't rocket science), so you can sense what the charts are going to look like 15 minutes, or 15 days, from now. This knowledge will allow you to place your trades at the right times, and get the positions you want, because you will be ahead of the 99% who just read charts.
All that said, discipline is the real backbone of great trading. A disciplined trader can take a simple trading system, even moving averages, and beat the socks off the guy with the greatest analytical software and fabulous real-time chart systems, who trades without discipline. Read the book, the Disciplined Trader, by Mark Douglas, before you read that piece of junk, The Electronic Day Trader, that DATEK is hyping.
I am also a very strong believer in fundamental analysis. Picking strong stocks is a way to mitigate risk...to put a floor under how far a stock will drop on a bad earnings report, and how well it will recover. The great traders mitigate risk first, then seek profits. |
