Sunday, August 23, 2009
Arcs and lines
If one draws enough arcs, lines, fans, and channels on a given chart, one is bound to find things that the mind interprets subjectively as significant.
This is because the human mind is strongly disposed by evolutionary forces to see pattern and structure in everything in nature, even where it does not exist. This is why disciplines such as palmistry and astrology thrive even in the modern world. Traders and technicians like to think of themselves as grounded in science and evidence-based practice; in reality, much of the discipline of subjective technical analysis bears more of a resemblance to alchemy or astrology.
Subjective TA lives on because it always appears to "work" in retrospect. Those lines appear to have meant something significant looking back. But subjective TA lacks prospective power. It does little to inform about where the market will be tomorrow, or one month, or one year from now. And from an in-the-trenches trading perspective, that is all that matters....
This is because the human mind is strongly disposed by evolutionary forces to see pattern and structure in everything in nature, even where it does not exist. This is why disciplines such as palmistry and astrology thrive even in the modern world. Traders and technicians like to think of themselves as grounded in science and evidence-based practice; in reality, much of the discipline of subjective technical analysis bears more of a resemblance to alchemy or astrology.
Subjective TA lives on because it always appears to "work" in retrospect. Those lines appear to have meant something significant looking back. But subjective TA lacks prospective power. It does little to inform about where the market will be tomorrow, or one month, or one year from now. And from an in-the-trenches trading perspective, that is all that matters....
# posted by MATT E @ 11:10 AM 
