Myths about technical analysis that will shock you

It’s no doubt that there is no shortage of individuals and even organizations that have claimed to have found the holy grail of trading or the magic bullet. More often than not these gurus teach one or a combination of several technical indicators but here is the thing about technical indicators

  1. They are the a shortcut to success: Just throwing in a few popular indicators on a chart will not make you a profitable trader. It also follows that you will not get rich before Friday. Technical analysis will only provide you with market insights which are valuable to you if you know the asset you are trading and it’s regimes basically, when that technical indicator works best.
  2. They are accurate: Indicators don’t dictate the direction the market will go. In fact majority of them lag behind it. This goes to show that you may require additional validation before entering a market. Indicators are not final! The market will go where it pleases
  3. They are quick and easy: Nothing comes without effort and definitely not indicators. One thing about them is that they add beauty or confusion to a chart especially when they start giving conflicting signals. Which do you follow?
  4. They are a self fulfilling prophesy: This is laid down to unsuspecting newbies. Since every trader is using this indicator it follows that everyone will be selling/buying same as you thus the market will bow down to the “pressure” and you will profit. FYI there are thousands of computers buying/selling in the same market just like you who have no idea what an indicator is. And they are terrifyingly fast not to mention traders who don’t believe in technical analysis and your broker who will take the other side of your position.
  5. They are all you need: Trading involves a lot more than slapping around a few indicators. It’s great that you have an indicator you like and use but you still need to work on your emotional and mental game. Yeah trading is all round as much as it is all day everyday!

At least now you will think two times before enrolling in a $1000 class to learn moving averages. OMG!

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