Technical Analysis - Help with trading?

Yes it helps with trading. Not all traders choose to use it, but some do and trade exclusively off it.

In fact, this is how Nassim Taleb picks equities to price his call options. He's all about finding the "black swan" and that's a bit easier to do using technical analysis. Of course, Taleb would also disagree with those academics that teach efficient markets; so just be aware what school of thought he's coming from.

I think it is useful, but I wouldn't 100% rely on it. Academics hate it, but real world is a lot different then what is taught in school. With the advent of black box trading I think technical analysis really helps find resistant levels, trends, etc.

Academics hate it yet it is lightly covered in the CFA L1.

Yea, they really hate it. Would totally violate EMH, and weak form too. Conclusion is that the market is not weak form efficient, but only algo trades capitalize on the info and make the markets efficient.

Candlesticks, Stochastics, moving averages, w%r, macd, and obv are the main (pretty much only) tools I use when I scalp.

The professors that say technical analysis doesn't work have no idea what they are talking about. If you read the Market Wizards series you will see plenty of brilliant investors that use solely technicals, solely fundamentals, or a blend of both.

edit: can someone tell me how to daytrade without techincals?

Interesting. I currently use candlesticks, support/resistance, stochastics, MACD, moving averages, and RSI. Are there any other indicators, etc. that I should add to my arsenal?

Maybe Elliott Waves/fibbonacci?

I think TA is great, especially if you have a good gut, but I wouldn't rely on it 100%. Also depends on your time horizon for the trade (the chart you're looking at).

Would you ever feel good about buying a chart like this: http://stockcharts.com/h-sc/ui?s=ARST&p=D&b=5&g=0&id=p13856003612

Or this: http://stockcharts.com/h-sc/ui?s=NTY&p=D&b=5&g=0&id=p46597341897

I don't think anyone (top er analyst, stock picker or whatever) could pound the table hard enough to convince me to buy some dog-shit chart like these.

Don't listen to the academic, or any professor who's contra TA... there's a reason why they're teaching and aren't trading. You should of heard the roar of laughter in my cfa class when the instructor, who's also a professor, said, "I used to do this sort of thing when I worked at a hedge fund...." And now your here, buddy?

Wow. 8o)

That NTY chart is just a death (bearish) crossover waiting to happen. The ARST already got a death crossover.

Man...

^^ kind of tough to find a reason to buy when falling through those short term moving averages.

Now the question is: what does the broad market do? We very well may have bottomed on friday, and if so, how could you convince yourself to short these battered names based on TA if you think the market could hold them up if we get a little rally? My guess is you begin buying puts or shorting the stocks a little ways out before their next earnings. Maybe get a little skin in the game now, but wait in case this correction is over.

Candle sticks > all

I have been actively trading derivatives for three years now, and from my own experience trading, I can say that technical analysis definitely helps with trading.

Moving average systems are best applied to markets that have less noise or guided by long-term macroeconomic policies.

MACD is one of the most commonly misused systems. It is typically more effective when applied to swing trading and breakouts; it is primarily used for the timing of entering and exiting positions. MACD typically has two components, two exponential moving averages (fast and slow) and a histogram, which is just the difference between the two EMAs. One of the common misuses of the MACD occurs when someone takes a long position just because the fast moving average is heading up crossing the slow moving average from below. That is not how it is supposed to be used. If that happened when the moving averages were above the zero line, the MACD is employed incorrectly. Where the moving average lines are relative to the zero line help eliminate taking the wrong positions. There is much more to the MACD and how it is best applied. Divergences create the best opportunities in my opinion.

Stochastic are mean-reverting indicators and are best applied to markets with more noise, like the equity markets; however, in periods where there is less noise and a market is transparently trending one direction, stochastics should be avoided. The markets can stay overbought longer than you can stay liquid.

Candlesticks have less credibility. Using a scientific method to back-test candlesticks can be difficult, probably because there are so many variations of them. Pure candlesticks, one bar, have more credibility and would be easier to test though. I personally do not like to use candlesticks in my trading, with maybe an exception to the Marubozu.

In my opinion, technical analysis developed a bad reputation in the academic world from classical charting techniques, like head-and-shoulders patterns, island-reversal patterns, and other esoteric price patterns.

Efficient market hypothesis is transparently wrong. It is possible to beat the market consistently. Market timing and risk management are crucial in order to do that.

Technical analysis is extremely helpful in deciding when to enter and exit positions. One of the best applications of technical analysis comes from its ability to help manage risk. I am a practitioner of technical analysis, and I can say that it has greatly improved my trading.