Replies to post #19739 on Advanced Micro Devices Inc (AMD)

[chipguy]

I've seen enough people, though, that are too "lucky" for me to dismiss TA altogether.

People generally have a poor innate understanding or feeling
for randomness and statistical processes. Both the mutual
fund/brokerage industry and Las Vegas rely on this for much
of their success.

I think it takes a talent for creative synthesis of lots of simultaneous factors, just following the rules will fail. Just like you couldn't reduce the style and performance of a great athlete or artists into a few simple rules.

The first warning sign of Charlatanism - the practioner's
claim that his method is too complex or "artistic" to be
objectively analyzed using the scientific method.

[sgolds]

blauboad, on TA, I agree -

I think it takes a talent for creative synthesis of lots of simultaneous factors, just following the rules will fail. Just like you couldn't reduce the style and performance of a great athlete or artists into a few simple rules.

This is in line with this quote from the last paragraph of the section in the TA book that I quoted in http://www.investorshub.com/boards/read_msg.asp?message_id=1875721 :

Unfortunately, because we live in the fast-paced world of financial markets, we tend to rely heavily on chart terminology and shortcut expressions that overlook the underlying forces that created the pictures on the charts in the first place.

Most people I've seen utilize TA and post about it take the shortcut of going to a site where these charts are calculated, but they do not sit back and consider the big picture of what it means. TA is an attempt to read market psychology. It is a factor in the timing of long and short positions to maximize gains (or minimize risk). As such, it is a tool to help the investor or trader in his decisions but does in no way replace the due diligence of that trader or investor to consider other factors that are available to him.

To fully depend on studying patterns to choose positions would be as foolhardy as ignoring those patterns totally. Ignoring stock patterns would result in the (too common) tendency to buy high and sell low because of the human predilection to the bandwagon effect. Ignoring an understanding of the businesses represented by one's investments (and depending totally on TA) would lead to an investment style which is devoid of a connection to reality.

This board, as most, tends to be filled with posts (of varying quality and accuracy) almost entirely about fundamentals. TA is hardly discussed. For a more complete understanding of investing, a little more TA would be useful.