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Comment by SeanDav | Hacker News Reader

Like most things in life, it isn't quite that simple. There are real inefficiencies in the market which can be highlighted by TA. TA can also be considered a form of Statistical Arbitrage and vice versa.

A simple example: There are many traders out there using TA, if sufficient numbers of them start following the same signals then real market impact occurs. You can use TA to establish what signals they are using and then front run them. This shows that TA has real power in some circumstances and there are many more out there.

I could go into a lot more detail, but am pressed for time at the moment.

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> Like most things in life, it isn't quite that simple.

Like most things in life, technical analysis is bullshit.

> There are real inefficiencies in the market which can be highlighted by TA. TA can also be considered a form of Statistical Arbitrage and vice versa.

Stat arb is not what is commonly known as technical analysis. They are distinct.

> A simple example: There are many traders out there using TA, if sufficient numbers of them start following the same signals then real market impact occurs. You can use TA to establish what signals they are using and then front run them. This shows that TA has real power in some circumstances and there are many more out there.

Keynesian beauty contests do not provide consistent alpha. If they did, we'd see fewer VCs flame out.

I have been a trader for 15 years, I have seen TA absolutely working and I have seen it failing. You can take the opinion of someone that has walked the walk, or not. I have given you a specific example where TA does work, so it can't all be bullshit right?

> You can take the opinion of someone that has walked the walk, or not.

In opinions we trust? What kind of a trader are you?

> I have been a trader for 15 years, I have seen "go all in on a bunch of calls" absolutely working and I have seen it failing.

That sentence is basically void of content.

> I have given you a specific example where TA does work, so it can't all be bullshit right?

No. You could give me an example of homeopathic medicines used shortly before someone goes into remission.

That doesn't mean that cures cancer.

Are you being deliberately obtuse?

The example I gave is a logical one, which just happens to also work on occasion in the real world. It does not rely on what sort of trader I am, it is a thought scenario, which can and does work in the real world.

Logically, if a large number of people are using a specific TA signal to make trades, their trades will move the market to a degree. Then if one knows what that signal is, one can reliably make money using the same TA signal.

So even if the actual TA signal is a completely random walk, an alert person can make money from that TA signal if they understand that the market will move because some powerful players are using the same signal for whatever reason.

TLDR: A bullshit signal can be used to reliably make money.

> A bullshit signal can be used to reliably make money.

Until it doesn't.

...just happens to also work on occasion...

How often do these occasions arise? If I used this technique every day, would I last a week before going broke? Give us some indication that this is more valuable than flipping a coin.

Stat arb is not what is commonly known as technical analysis. They are distinct.

No. Technical analysis is forecasting prices based on past data. Stat arb is a particular form of technical analysis, based mainly on looking for mean reversion in sets of securities.

Strictly speaking, statarb \subset technical analysis.

> forecasting prices based on past data

By your definition everything is technical analysis.

Which makes your definition useless.

Hardly - fundamental analysis exists.

Any strategy lies somewhere on the continuum of strategies ranging from purely technical (looking at past prices only) to purely fundamental (looking at fundamental data only).

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