Posted: May 13, 2019 4:57 am
by OlivierK
jamest wrote:Technical analysis works because [say] 70% of the time the price of X reacts predictably to various indicators.

Sure, but the "indicators" are internal to technical analysis, not based on external reality. If technical analysis shows $6000 as a Bitcoin support level, then lots of people will put their buy levels at $6000. And then the Bitcoin price is likely to bounce off the $6000 level, unless it doesn't. That doesn't show that technical analysis predicts prices directly, it shows that technical analysis can be used to predict the market behaviour of technical analysis disciples. And... yeah, no shit.

Getting into technical analysis for crypto makes a certain amount of sense, though, because the vapourware aspect of crypto means that there aren't actually many real-world influences on price (like economic data for currencies, or profit or takeover announcements for stocks), so technical analysis - even though it's woo - has an exaggeratedly significant effect on the markets that it would be negligent to ignore.

jamest wrote:Thus, a disciplined trader might be right 70% of the time. Trading is a skill.

A trader being right 70% of the time can still lose out. Some of the best traders I worked with were right pretty much 50% of the time, and sometimes even less. They just knew how to run their profits, and cut their losses. And even those guys sometimes fucked up spectacularly. Hopefully you don't.