Technical Analysis is often criticized for its non-scientific nature by the scholar community, yet many successful brokers on wall street swears by it. Some employ a mixture of technical analysis and fundamental analysis.

For those that actively trades stock bonds and futures, what's your take on employing technical analysis? and what methodology have you had success with?

 

take a look at the oil sector this year. every single time there was political pressure or something blowing up in the middle east oil prices skyrocketed. And when the news said that when tensions were decreasing...prices went down. It's all fundamental

go ask the billionaires of exxon mobile because they are the winners

 

I think technical analysis works because it's a way to "quantify" the general emotions and feelings of the market, which in itself is non-scientific, but it should never be used as your only indicator. One bad piece of news (or good piece of news) can change the direction of the market in which the technical indicators won't show for the next few days.

 

Fundamental analysis will win you over in the long-run. It's been proven to work in most scenarios. But technical analysis adds another dimension fundamentals can't explain, but beware that technical analysis doesn't follow a strict # of things which means it is more dynamic and can have unexpected changes which are unexplainable.

I personally approach it first w/ the fundamentals. If the results are wishy-washy, I would jump into the technicals for my 2nd opinion.

 

Technical analysis to me is a type of hypothesis that's not 100% accurate but it's as close as we'll get with the stock market at least. My .02 cents. Great idea for a thread.

 

Im a newb at this, but I intend to become good at it. as far as my perception goes, I feel like technical analysis, though unscientific does work, and it benefits the short term traders especially day traders because a lot of variables just dosnt necessarily get reflected by the market immediately. And theres always factors that you cant account for no matter what type of methodology you use or believe in, so even though scientific, fundamental analysis isnt perfect either.

it seems a combination of both tend to be very powerful when used right. However everyone has their own style and their own way of analyzing the variables, so how much of which to use and when to use is probably different for each individual. thats also likely what seperate the bad analysts from the good ones and the good from the great.

 

I would say it also depends on the market you are trading with, i.e. Microsoft is releasing it's new OS next year, Vista and if you look at past releases of their OS their stock rises when it first comes out (as the same happens for many releases) so I would probably use more technical analysis in this case.

 

Mmmm interesting thread. Anyone know how affective technical analysis is when it comes to short term chart patterns? I'm just getting into this area.