Technical analysis is a crutch - Cryptocurrency Exchange

The underlying logic of technical analysis is,

giving you a crutch that can understand stock market trends.

While a crutch certainly can’t make profits run wild,

without it,

even walking becomes difficult.

From Livermore’s perspective in “Reminiscences of a Stock Operator,”

it explains the entire process of the birth of technical analysis: in the early days of the stock market,

there were only a series of prices,

trading all day long,

and at night you couldn’t even recall the opening price,

even if your memory was extraordinary,

the only thing you could remember were chaotic numbers,

making it impossible to judge stock trends naturally.

After more than ten years,

moving averages were introduced in some major exchanges.

Therefore,

looking at stock price movements through the 5-day moving average

is the most basic and important form of technical analysis.

Later,

regardless of MACD,

RSI,

Bollinger Bands,

RDJ,

the essence is increasingly precise depiction of stock price movements,

and the summarized concepts like divergence,

overbought and oversold,

are just macro mathematical probabilities,

based on the law of large numbers,

the more you trade,

the more likely your results will conform to probability distributions,

but probabilities themselves do not act,

and over time,

probabilities can change.

Thus,

technical analysis itself is not an advanced application or a winning secret,

but the foundation of foundations,

its primary role is,

to make you clearly understand when you’re losing money.

Why does the stock price suddenly crash despite a strong upward trend? Because there is capital shaking out the market,

you need to study the fund flow;

Why does a stock keep rising even when overbought? Because it has received orders from Google,

that’s news sentiment;

Why do stock prices fluctuate up and down,

yet capital keeps entering without fear? Because several state-owned enterprises have joined as shareholders;

and all of this presupposes,

that you understand technical analysis,

and know how stocks are supposed to “operate,”

then the money you earn can become your experience,

the money you lose can become your tuition,

and only then can you have “growth” in the stock market,

rather than just muddling through with random losses and gains.

And after growth,

if you have strong logical and scientific thinking,

you can strictly build a quantitative trading system based on mathematical probabilities; if you have macro thinking skills,

you can follow the trend,

and practice value investing.

Of course,

it’s more likely that you need to understand both,

and the ratio between them

defines your “style.”

But no matter what your style is,

you cannot do without this crutch called technical analysis.

Because without it,

you can’t even see the market.