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I have a couple friends that do day trading on "technical analysis". As in, they only trade on the chart movements. Both claim to make money consistently. I generally believe them, but it seems like black magic to me. Especially when they explain what they're doing in detail.

Not sure I understand this study tho, and whether or not it relates.

One thing to keep in mind is that even a random number generator can trivially turn a profit when the market is trending up. It's when the market is volatile or going down that you get a real test of how well a strategy works.

Which isn't to say that technical analysis is unfounded. And I do believe that there are opportunities that exist for individuals that haven't been arbitrated out of the market by the professional quants simply because they don't represent enough money to be interesting on an institutional scale. But it takes something like a bear market to really know for sure if you've found those opportunities, or if you're just riding a rising tide that lifts all boats.

>I have a couple friends that do day trading on "technical analysis".

As someone that trades on fundamentals I like to think of that as reading tea leaves. Literally non sensical. Oh yeah sure that pattern is the upside down elephant so we should go short...

No smoke without fire though so I assume some are making money with it. Just doesn't seem like a sound idea to me.

I also have a few friends who do well day trading (which is usually done by mostly or only technical analysis). They have done well for themselves as they actually treat it like a job. Constantly trying to educate themselves, being at their computers paying attention to the market for the entire trading day.

Most folks who feel the allure of day trading don't realize that to make it work it has to be your full time job. You can't just make some trades, go off and do something else, and expect to make any money.

What i have seen this algos work mainly by having a high chance of winning a small payout and a very small chance of losing everything. So everything works fine for 1/2-1 year and ppl spread word of mouth how nice this steady income is. Meanwhile the owner of the algo/platform makes a nice commission. Then everything goes bust and starts anew somewhere else.

Technical analysis works the same way the weekly paper works to say that Virgo or Capricorn will have a good week at work.

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