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Does Technical Analysis help with trading? By technical analysis, I mean moving averages, MACD, Stochastics, RSI, candlesticks, etc.

Academicians say it doesn't work because of the efficient market hypothesis. However, I know some finance professionals who use it.

Comments (13)

  • matt's picture

    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.

  • UncleKevin's picture

    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.

  • Joshua.D's picture

    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?