Does Any Technical Analysis Work? (Part 6)

Today I conclude with my internet sample of opinions on whether technical analysis (TA) can actually work.

Here’s an excerpt from an article by Proinsias O’Mahony:

     > While TA remains widely used, that doesn’t mean it’s not bunkum.
     > Indeed, many technical traders would be the first to accept that
     > the field is full of charlatans. As bond expert and author Martin
     > Fridson has written: “The only thing we know for certain about
     > TA is that it’s possible to make a living publishing a newsletter
     > on the subject.”

See my post here.

     > Such newsletters are full of references to obscure Japanese
     > candlestick chart patterns, Elliott Wave theory, Fibonacci
     > numbers, and all kinds of other vague and unverified assertions.

I wrote about some of this here.

After all the opinions in these five posts, what do we have?

The four excerpts from Part 2 are optimistic and give me hope.

The two excerpts from Part 3 suggest that anything we find in books, seminars, or on the internet will not work.

The commentary from Part 4 suggests that no simple indicators will work and that bots available for purchase will not work over the long term. The latter is not new because I don’t expect any system to work forever.

[9] – [11] in Part 5 argue that no bots for sale will ever work, no .pdf guidelines or strategies based in TA will work, no simple TA-based systems will work, and that institutions advertising advanced TA-based departments with oodles of computing power and academic doctorates are really for marketing purposes only.

Today’s excerpts argue against TA like most of the others I have surveyed.

Of all this, I have to hope [1] – [4] is correct. It may not be easy, though. Although my initial impressions do not concur, at least one prolific writer in the algorithmic trading space says simple strategies are all we need.

As an aside, O’Mahony also provides some ammunition in case I ever want to sound off on fundamentals again (see second-to-last paragraph here):

     > The same can be said of fundamental analysis, however.
     > Billionaire investor Mark Cuban once scoffed that “fundamentals
     > is a word invented by sellers to find buyers… metrics created
     > to help stockbrokers sell stocks, and to give buyers reassurance
     > when buying stocks.”
     >
     > That may be cynical, but it’s a documented fact that most
     > fundamental managers underperform the markets. Most investors
     > would be better adopting a buy-and-hold approach rather than
     > painstakingly studying stockbroker notes in a futile attempt
     > to gain an edge.

Do you know if any successful traders even exist?

Next time, I will come back to discussion of my personal experience thus far.