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Technical Analysis: Why it Works and its Limitations

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Technical Analysis: Why it Works and its Limitations. Francis Hunt, a technical analysis trader and coach comments. If you've found this video useful, please click the like button and share it with your friends and remember to SUBSCRIBE to remain up-to-date! Do you really believe that technical analysis can help traders? In what ways? How can a chart help forecast future prices if they are based on the past? Do you base your trading solely on technical or do you also use fundamental analysis? Can technical analysis by itself be the mainstay of an investment strategy? We know that in practice what happens in reality is that one piece of real news can blow up months of small technical gains. Please comment. Technical analysis works for me but I've selected the elements that work for me and there are limitations. There are a number of concepts that I feel don't work and which I avoid. Traders are taught indicators and moving averages; many of which are lagging the price action. I think there is too much fascination on indicators and too many traders get caught up trying to seek price tops or bottoms. I think price action is often de-emphasised. I do value volume and things like bollinger bands. I also use chart patterns as these capture people's footprints and DNA of a crowd's response to certain impulses.
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Text Comments (37)
Matthew O'Gorman (2 days ago)
"The tale is wagging the dog" - Great quote
Sumit (11 days ago)
Most hedge fund bots use Emas and Mas for trading so he is a bit wrong about indicators
Lucas Martin (3 months ago)
"What about fundamental analysis? Do you use that?" Bruv...
Daniel Wong (3 months ago)
This video explains what TA is all about. I agree that patterns are most useful Fundamental analysis and technical analysis are two side of the coin.
azli othman (4 months ago)
On TA. back test then front test and then do it again and again and again surely one day you will find something that works.
dee nixon (5 months ago)
if i didn't need to sell a kidney to buy your course, i would buy your course
Greg Pamplona (5 months ago)
This guy knows what he says....
Taran Van Hemert (5 months ago)
Sebastian Rubilar (5 months ago)
I am a finance major as well. I am huge on FA & TA. To think technical analysis doesn't work is absurd. Think i'm lying? look thru any small or large cap stocks. I can guarantee you will find many many sup. & Res. , moving averages (50)(100)(200), pivot points, candle stick patterns etc... getting respected throughout the chart. Looking at level 2 and volume is extremely important. I would never go in a trade with high spreads and manipulation. I have ridden stocks over 400% in a day thanks to TA.
Nathan Junor (5 months ago)
GlobeTravel (6 months ago)
You were very good in X-Men!
Hung Lo (10 months ago)
Moving averages are useful as an aid as well as Fibonacci retracments, again as an aid. Don't think they should be the primary driver on whether to enter a trade or not, but if they line up with all other factors in your system I think they can be useful.
stasyszy (11 months ago)
I have found, telling people what you do and how you do it never affects your profits. People either do not believe or implement what you say wrong, or try short cuts and sometimes they can not be bothered. Use what works well, never stop learning something new ;)
Blaque Ink (11 months ago)
IQ level increased.
Muhammad Saleem (1 year ago)
nice v good
O Best (1 year ago)
Man, first of all nice suit. second of all, why did you lose all your hair? to much stress?
Anthony Henderson (1 year ago)
A few handy visual aids that complement a chart, but Im perplexed by people who use technical analysis exclusively, I guess its a manifestation of a compulsive addictive personality. From a value investors point of view Im glad there are so many of them though!
Thomas Chen (1 year ago)
Higher low higher high are the Lego of uptrend. Remember this , moving average can also be ignored.
Nayan Mipun (1 year ago)
nov 1, 2016, In fact the MACD is a predictive tool rather than lagging tool, MACD is 1 of the best, various settings of MACD does help, 4 4 12, 9 9 24, 18 18 48, 27 27 72,
Nayan Mipun (1 year ago)
dec 13, 2016, Well yes hold on please,
Bilal Kayani (1 year ago)
Can you send a screen shot this where you applied all of them b.kayani1991@gmail.com
Nayan Mipun (1 year ago)
nov 30, 2016, You have to use them all together, and the 4 4 12 for the immediate trade,
Bilal Kayani (1 year ago)
fast length 4 , slow length 4 , signal length 12 that's what you saying about 4 4 12 and so
ultimatedilan (1 year ago)
technical analysis: voodoo
AvalancheofNeed (1 year ago)
What do you think about the MACD indicator? I use thinkorswim and I'm considering using MACD, 2 lines, with fast at 15 days, and slow at 30. Looking over its historical accuracy, It seems mostly spot-on, but it does look like there can be some moments of obscurity at times (fast hitting slow, then bouncing back up, or both hovering around the same value). I'm just now getting into serious, analytical trading, and I'm new to indicators as a whole (previously, just taking a kind of fundamental approach, and protecting with stop orders). Are there any indicators that could help with the shortcomings of the MACD?
Licensed 2 style (2 years ago)
Amen on the explanations of the Indicators. Since my start in FX trading I have always thought "what are you supposed to see/know or anticipate from these indicators. They are in fact an indication of something that has already happened. Yet many instructors of FX only talk about the 50 EMA and MACD and RSI and if these things happen then do that. Love the sniper analogy as well.
Eilrahc94 (2 years ago)
one of the first thing we learn as finance majors is how technical analysis doesn't work...
Brickstun Ram (1 year ago)
The gentlemen is referring to price action, not what finance courses in a uni refer to as technical analysis , which is technical indicators.
Adrian Bräysy (2 years ago)
this was really interesting. I use technical analysis, and I use a combination of S/R lines I draw in myself, price action at those levels to find reversals. Then I use volume to see if the trend is in good health
Sanjay Khosh (2 years ago)
Technical analysis indicators can be used to get informations , it doesn't mean you can trade based on indicators , some are really helpfull , based on the informations you should derive your trading system and not on the indicator that gives information....
Ashfaq Sheikh (3 years ago)
Agree with this gentleman to a large extent. Most over-bought and over-sold indicators are distractions and are detrimental to successful trading. They only indicators which are useful are trend indicators like moving averages and Parabolic SAR.
Ashfaq Sheikh (2 years ago)
+Antonio Montgomery Thanks anyway. Regards
Antonio Montgomery (2 years ago)
They do work, you have to apply them in multiple .. you know what, why give up the secret
J B (2 years ago)
Depends on the context. Every discretionary trader makes trading decisions differently based on different criteria. Unless he is copying someone else.
Ashfaq Sheikh (3 years ago)
Ashfaq Sheikh (3 years ago)
+Supreme Illuminator Many traders and market professionals swear by Fibonacci levels (percentages). I have personally back-tested it and found that the market does not give a damn about these supposedly sacred numbers. Same is the sorry situation with Elliot Waves. However, many professionals use it religiously. Well, good luck to them. I never use these and am quite successful. The only time market slaps me around is when I over-trade. LOL 
omgnotaflake (3 years ago)
The Francis Hunt videos are excellent. Very helpful interview.

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