Technical Analysis Quotes

“The trend is your friend” – Anonymous

At the very basic level, a market can only do two things: trend or consolidate. When trending, instead of worrying when the trend will turn/change, go with it. Assume the trend to be intact until proven otherwise. Innocent until proven guilty!

“They are a reflection of the trend in the hopes, fears, knowledge, optimism, and greed of market participants. The sum of total of these emotions is expressed in the price level, which is, as Garfield Drew noted, “never what they (i.e. stocks) are worth, but what people think they are worth.” – Martin Pring, Technical Analysis Explained.

Sometimes people think technical analysis is akin to star-gazing, looking at clouds to predict the weather, or even staring into a crystal ball. The problem with such absurd and preposterous claims is that a chart is not just a chart. A chart is not something generated by a brokerage house, to the whims and fancies of the computer programmers. A chart is an accurate depiction of price data – prices in a chart representation. And what determines prices? Market forces based on supply and demand. What then determines supply and demand? The many factors that fundamentalists look at. So please do not insult technical analysis as some kind of voodoo, magic 8-ball, or palm-reading art. A chart is more than that.

“The illusion of randomness gradually disappears as the skill in chart reading improves.” – John Murphy

I believe alot of the flak that technical analysis gets from successful fundamental investors like Buffett and lynch is uncalled for. I do not think those investors delved deep enough into technical analysis to know the right ways of using technical analysis. And that is fine, since we all go down different paths. As they say, all roads lead to Rome. If you use fundamental analysis, and you are successful with it, then good for you. But, do not discredit technical analysis if you simply have not found the right methodology. There are successful proponents of technical analysis. Just learning the very basics of technical analysis (chart patterns, indicators, fibonacci, etc) is not enough. In fact, you will lose money if you apply the basics. You need to learn more, and though it is a paradox, only after learning as much as you can should you then condense everything into a brand you can call your own. Find a certain style of technical analysis that will help you read a chart better.


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