# Technical analysis fact or fiction?



## Tippy (19 Aug 2008)

Just like to hear people's opinion on this. Is it possible to prove either side of the debate?


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## z106 (19 Aug 2008)

Tippy said:


> Just like to hear people's opinion on this. Is it possible to prove either side of the debate?


 
Well - the way i see it there are 2 schools of thought on technical analysis.

Predictive (triangles,elliots,fiobanacci etc,) and reactive (trend following).

With both you can hav a certain element of self fulfilling prophecy given that you can have a large amount of people looking at some technical signal and all acting the same way once it occurs.

SO putting that aspect of it aside, I haven't done any real proper research on the predictive side. 
But if you're asking for my gut instinct then i think no. (strongly suspect that in fact)

As for trend following, I think that basically it gives you a value bet.
A bit like getting 5/4 on teh flip of a coin off a bookie.

Identify enough value bets and use proper money management then you can develop a system that produces a positive expectancy.

Of course - whatever system you use it is absolutely doomed for failure if you do not employ proper money management.


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## RichInSpirit (23 Jan 2012)

The simple support and resistance stuff seems to work fairly well. I'm not too good on more complex stuff ! 

I suppose the basis for technical analysis is that if a large number of people are following it, it becomes a self full filling prophecy.


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