trader717

More on Technical Analysis

Felix,

I have read both of your recent articles on TA and suggest you just stop now. Not only are you clueless on the matter, but you seem to not have put forth any effort in researching TA and how it is truly used by those who are successful. The first article was horrible, and now you come back to defend it.

I am a Jr. Portfolio Manager at a hedge fund and know that technical analysis works. It does take time to learn and takes much patience when applying it. There are also many confirmations that people tend to ignore. Much of the smart money out there knows how to use technical analysis. It is just one factor that must be considered when trading or investing. I use Free Cash Flow models, Multiple Valuations, Regression Models, Financial Statement Analysis, AND Technical Analysis when researching. These are just some of the factors investors consider, and depending on if you are trading or investing you give more weight to certain ones (i.e. if you are looking for a short-term trade you weight technicals more). Technicals also range from analyzing market stats, to chart patterns, to indicators, to looking for short squeezes. Smart money combines all of this research. There is only so much each factor can tell you, for example, a FCF model may tell you the Fair Value of a stock is $20. The stock is trading at $20 on January 1st. You decide not to invest because it is fairly valued, but by June it is at $60. By December 31st, it comes back to $20. Smart money makes 100%, you make none and think you are so intelligent because you knew it was fairly valued. Hopefully point taken.

So in the end Felix, please do not publish anything on TA like this ever again.