What sort of skill are you supposed to be training when you don't even know the time period or security you're trading? Just by staring at the brownian motion really hard?
For technical analysis to be anything other than an abstract form of gambling, the efficient market hypothesis has to be flat out false.
Representing the market using brownian motion only applies in cases where the market is under the weak or strong forms of EMH.
That flies right past EMH and into the realm of pure numerology.
I might be in the wrong here, but all my experience points at TA being something that's used to sell online courses/generate advertising revenue rather than being a legitimate way to trade.
I have. The theory is that the fundamentals of the security are reflected in it's price movements, so reading its price action is roughly analogous to reading news relevant to the instrument. Also it's not really about looking at the "shapes of candles." That's a frankly primitive approach to technical analysis, and one of the biggest reasons that people keep drawing comparisons to astrology, numerology, divination, etc..
Technical analysis is predicated upon the assumption that the efficient market hypothesis is true, and that all investor sentiment and other relevant information is all already priced in.
Whether TA is actually valid or if it's just drawing random foofy lines on a chart remains up for debate.
If EMH is strongly true, then the price of a security will always be priced to the intrinsic value of the underlying. For TA to work, the price needs to be divorced from the intrinsic value because the change in intrinsic value of an asset doesn't follow any pattern.
If EMH is strongly true, even fundamental analysis should yield no alpha since all public information would be integrated into the price. That's why there's a distinction between strong and weak EMH.
https://www.investopedia.com/ask/answers/032615/what-are-dif...
The way it was explained to me is that if the EMH is true, then looking at fundamentals is pointless because all the fundamentals are already priced-in, which leaves nothing but price and volume data left to analyze.
How could EMH be anything other than true in that case?
I'll note that investopedia is often not a good source. Here's an investopedia article that explicitly supports my position, for example: https://www.investopedia.com/terms/t/technicalanalysis.asp
I'm afraid I don't know what else to tell you, there's no public links to CFA Institute study materials and they're a pretty definitive certification authority in finance.
So, TA proponents believe that market forces, economics, political and social trends, etc, are all instantaneously absorbed by the market - but "double tops"[1] and "hanging mans"[2] and "three black crows"[3] are all low-hanging fruit that the elite can take advantage of?
I'm usually pretty open-minded, but I can't make myself see anyone believing this non-ironically.
[1]: https://www.investopedia.com/terms/d/double-top-and-bottom.a... [2]: https://www.investopedia.com/articles/active-trading/040914/... [3]: https://www.investopedia.com/terms/t/three_black_crows.asp
People pushing technical analysis do believe that it's pointless to look at fundamentals because all (or most) fundamental information is already in the price and hence it's pointless to look at fundamental data. In my opinion this discussion is about as pointless as a religious war.
In the real world specifics and details matter. In general, the weak form of the EMH does hold, as in if you think something is worth twice what the market says it is and you don't have a really good reason why the market doesn't realize this, you are almost certainly wrong. This of course makes a weak form of the claim that all fundamental information is in the price also true.
This is easy to see in the massive consolidation in the market making space in traditional finance over the last decade and also you can watch it in real-time right now in the crypto space. Even two years ago, it was pretty trivial to be successful as a market maker using quite naive models and a system glued together in Python in a couple days. Today, things have gotten significantly more competitive: many single man operations have become uncompetitive and even larger (3-10 man) and more sophisticated firms are feeling the heat from behemoths like Susquehanna, Jane St, and Jump Trading.
It's amazing how you can feel the crypto market getting more efficient in front or your eyes. It's like running on a treadmill, and you're always terrified it will start going faster than you and your team can run.
Also, here's my favorite counter argument to EMH - https://securityboulevard.com/2020/04/investors-buy-up-the-w...
(Inventing involves significant risks. You could lose all of your capital. Nothing I've writtend should be construed as investment advice)
To a certain extent, if a lot of people are doing this this can turn out to be a self-fulfilling prophesy, because lots of people are looking at the same charts and saying "it's bound to fall now" and so sell their assets.
The problem is, this only makes any kind of sense with assets that have very little "real world value" grounded in reality. Why does the price of BitCoin going up? Because people expect it to go up. So they buy it. So it goes up.
Self-fulfilling prophecy is not a real thing - take any chart and you can find 10 patterns that say up and 10 that say down. Big players move the markets and they don't use retail trader Technical Analysis patterns.