Abuses and misrepresentations of chart analysis ....the road to hell

If anyone who has taken classes in Finance, I can assure you the topic of Chart Analysis or maybe Technical Analysis is definitely blackout from the topic. The next source of chart analysis is from published materials or internet or maybe some talk shows.

The biggest idea that come to people who are interested in this field is all about target predictions like a fortune teller or fengshui. This is the wrong way to approach market analysis using charts. Well for commercial reasons this charting software will be of no value or interest if it is not capable of making predictions. The problem with such predictive approach is dangerous as some predictions may come true and some might not. Well this is why it is called VOODOO analysis.

If one is to be patient to learn and understand the value and correct approach to chart analysis, it is about trying to understand what it has done in the past, what it is doing now and what it is most likely to do in the future. While the classic academic financial valuation analysis also uses historical data to predict the future,  the mathematical approach makes it "credible".

Chart is about Direction. Direction is about Trend. Trend is about momentum. Momentum is about Demand. Demand is about Willingness. Willingness is about Appetite. It is all about the ability to repeat the past till it is exhausted. This is a simple one sentence what chart trend analysis is all about.

Like any other product, without adding the ability to predict where and when it will end, this chart trend analysis will be dry and boring. When you add this in... it become unstable.

In my years of guiding and teaching or sharing what chart trend analysis is all about ... the crux of this topic ... is about the trend, the ability to repeat what happen yesterday and the sustainability. PREDICTION is last on my list and most of the time it is not in the list.

IF you do not know if you can understand with good certainty the ability of yesterday action will be repeated today, HOW ON EARTH ARE YOU GOING TO PREDICT THE FUTURE!!!!

If the trend is intact has no sign of weakness or going to stall, it doesn't matter what the volume is despite all the books mentioned about trend and volume. It doesn't matter what the candle or bar looks like. They can be long or short candles and if the trend is not going to change or due for a change, it is not going to change irrespective of what fancy names you are giving to the candles formations.

Unfortunately they are many people trying to sell snake oil to make a living. It is when you did not profit consistently or loss your money only than you know you are a victim of the unscrupulous profiteers and your own mental trap.

It is all about asking simple commonsense questions. Remembers, predictions take time. Most of time it goes the opposite before it goes the right direction.

A simple strategy is and can be more effectively potent than a complicated one. What if it exceeds your predictions or fall short. If predictions can't be right on the dot, why bother!!!!