What exactly is TA made of?

tarmarder

Whenever I describe technical analysis (CCI, RSI, MACD, etc) to people who ask me about it now, I usually tell them how it's like watching a donkey followed by a cart. You can definitely see a relationship between the cart's path and the donkey's path. BUT, I've seen too many times where the donkey didn't go next in the direction indicated by the cart's path. Unfortunately, the donkey has a mind of its own and can decide at any moment for any length of time to go to the left ... when the cart has been going to the left or right. If anything, chart indicators do get a trader to participate which is necessary to make money. But that participation may also result in loss as well. The most effective use of chart indicators basically comes down to money management ... in terms of how best to manage trades based on a series of coin toss flips. Well, that's my opinion at least.

CoolMax