Please convince me that technical analysis works

[FX4Newbies]

Using 52-week lows can be a good place to start looking, but hopefully there is also a solid method in place for the entry. Also with stocks, be on top of company and market fundamentals as well.

And yes...some of these strategies and robots work until they don't, which is why you need to keep testing their consistency over time.

 

[brettb]

Using 52-week lows can be a good place to start looking, but hopefully there is also a solid method in place for the entry. Also with stocks, be on top of company and market fundamentals as well.

And yes...some of these strategies and robots work until they don't, which is why you need to keep testing their consistency over time.

I think it's a good place to start... at least until I figure out some other strategies. I wanted something I didn't need to write my own scanner for.

I have a FastGraphs subscription which takes care of the fundamental analysis. It takes me seconds to analyse a stock and screen out stuff I don't want to own.

I'll probably stick with 52 week lows for a while. There's a load of analysis I can do with them now I have so much data.

 

[FX4Newbies]

Sounds good. Here's another tool you might look at for scanning... https://finviz.com/

Always nice to have a second opinion to compare.

 

[brettb]

Sounds good. Here's another tool you might look at for scanning... https://finviz.com/

Always nice to have a second opinion to compare.

Thanks - I use FinViz a lot. I found they have a free 50 day high/low scanner. Buying 50 day lows appears to be potentially much more profitable than 52 week lows. It's probably because there are many more stocks to buy and also higher quality stocks are more likely to be regularly putting in 50 day lows compared to 52 week lows.

 

[FX4Newbies]

Great brettb. Glad you're already using it.

Personally, I'd be more cautious of buying a 52-week low stock. I'd certainly want to know why it had been dropping to that extent. Not a bottom-fisher when it comes to stocks.

 

["D"]

Hi Brettb,

One part of your method I would like to highlight for others is the importance of knowing where you are on a chart before you take a trade.

Buying 52 week lows or 50 day lows potentially has some very nice advantages. The first is you are buying at bargain basement prices. Very important when it comes to reselling. Maximizes profit. Second, downside is potentially limited which limits risk. How much lower is price likely to go? The third is, when you are buying at the bottom the trade likely has a lot of room to run higher. Three important aspects of trading.

It is not just about buying at 52 week lows/50 day lows, but buying at other advantageous locations on a chart. And this applies very well to other markets. Not just stocks.

 

[FX4Newbies]

Adding to D's comment if I may....

Research the company well to be sure that things are in good standing. A stock price may be low, but that doesn't mean that it can't go to zero. A low price may not always be a good price.

 

["D"]

Yes of course. My post was geared toward the basic concept with his methodology very workable and sound when properly applied.

I did not do a good job of it with my post, but I wanted to emphasize the location on the chart where you buy and sell is every bit as important, often more important, than the actual setup itself. The location on the chart where you take a trade at can easily make or break a trade, irrespective of how good the setup is. Brettb seems to understand the effectiveness of this incorporating it into his strategy.

 

[FX4Newbies]

Yes of course. My post was geared toward the basic concept with his methodology very workable and sound when properly applied.

I did not do a good job of it with my post, but I wanted to emphasize the location on the chart where you buy and sell is every bit as important, often more important, than the actual setup itself. The location on the chart where you take a trade at can easily make or break a trade, irrespective of how good the setup is. Brettb seems to understand the effectiveness of this incorporating it into his strategy.

Okay D.

By location, are you referring to those institutional price levels, or something in relation to news on the stock or something else? The reason I am asking is because you have emphasized it more than once, and it seems to have something more than the traditional technical analysis behind it.

 

["D"]

You are looking at the USD in a healthy uptrend. It pulls back very nicely, but is still considered overvalued. A beautiful buy setup occurs on the pullback. Do you take the trade? You can. Many will. I wouldn’t. The USD is still overvalued which means it is considered expensive. Harder to buy at an expensive price and sell it for more money. I don’t care how nice the pullback or how great the setup. Why should I buy something that costs more than it is worth?

This may not seem like much, but it is really important. No different than overspending all the time when shopping. You get less stuff that costs more money. Good shoppers or get more stuff for less money.

 

[FxSuperb]

Of course technical analysis works today I have 3 winners on BTC/USD. I scalp it today for two times. And before this I took buy, check video below for but trade.

I also use fundamentals, for intraday trades

 

[FX4Newbies]

You are looking at the USD in a healthy uptrend. It pulls back very nicely, but is still considered overvalued. A beautiful buy setup occurs on the pullback. Do you take the trade? You can. Many will. I wouldn’t. The USD is still overvalued which means it is considered expensive. Harder to buy at an expensive price and sell it for more money. I don’t care how nice the pullback or how great the setup. Why should I buy something that costs more than it is worth?

This may not seem like much, but it is really important. No different than overspending all the time when shopping. You get less stuff that costs more money. Good shoppers or get more stuff for less money.

Agree with your concept! By overvalued though, are you looking at it fundamentally or are you implying overbought from the standpoint of TA. Just trying to be clear.

 

[FX4Newbies]

Of course technical analysis works today I have 3 winners on BTC/USD. I scalp it today for two times. And before this I took buy, check video below for but trade.

View attachment 339223

I also use fundamentals, for intraday trades

Yes...TA does work! Glad you have an approach that works for you. That is very important, as there are traders using systems and methods that they don't understand, and in some cases, may be beyond their risk tolerance.

 

["D"]

By overvalued though, are you looking at it fundamentally or are you implying overbought from the standpoint of TA. Just trying to be clear.

I look at it fundamentally. The fundamentals have to be in place. Only after the fundamentals do I look at technicals.

 

[FX4Newbies]

I look at it fundamentally. The fundamentals have to be in place. Only after the fundamentals do I look at technicals.

Got it. Makes sense. Thanks.

 

[Geraldo]

Price goes up, you buy. Price goes down, you sell. Any child can tell you. And set a SL, and depending on your expectations a PT. Forget about TA. Total waste of time.

 

[Geraldo]

Agree with your concept! By overvalued though, are you looking at it fundamentally or are you implying overbought from the standpoint of TA. Just trying to be clear.

Not exactly aligning with your quote: trade what you see.

 

[FxSuperb]

Not exactly aligning with your quote: trade what you see.

What if he see technical and fundamentals aligning together and he trade it?

 

[FxSuperb]

Still works, so many great setups on BTC,
I also create another video trend continuation entry model.

 

[FX4Newbies]

Not exactly aligning with your quote: trade what you see.

Hi Geraldo. For the most part, Fundamentals would, at some point, be reflected on the chart. I was responding to what was posted by D. I do agree that Fundamentals have an impact on price, especially in the long-term. When they are in harmony, what you see on the chart could allow for a trade that would run for a longer period of time.

Hope that clears it up.