Good points here. There are some huge traps for small investors with no discipline. I learned it the hard way. Crypto markets act differently from classical security markets, technical analysis fails, fundamental analysis for “emerging markets” is infeasible. Trust is the most important factor imho.
I hugely disagree with this statement. Because the crypto markets are not spoiled yet with all kinds of silly financial products, I have found the standard technical analysis tools quite handy to make trading decisions. My trading in the past (I’ve stopped trading altogether, and turned to holding long. Really long.) failed because of stupid emotional decisions, not because I couldn’t trust technical analysis.
Agree…plays no role. There may be coincidences but true T/A is worthless here. The key reasons lay in how unknown factors are controlled in a regulated environment and not in unregulated markets.
When a new coin is issued there may be founders who control a large number of coins who have no lockup agreements/periods and can dump at will.
Insider trading is not just about illegal activity. In regulated markets insiders must declare holdings and trades. In crypto developers and investors and promoters can play markets or have proxies (family, friends, etc) play for them and their is no recourse. There are cryptos that are supported on exchanges SOLELY by the founders to make it appear there is some measure of liquidity and illegal in regulated markets. Developers can warn of imminent problems to their proxies and selloff or offer up a positive comment reflecting coming good news. Any trading anomalies are investigated in a regulated market, not so in crypto, to each his own. Companies have no control over when information is shared - even non-public information - so Github repos’, pull requests, etc may tell a story, but the brainstorming sessions are private and may provide different indicators pre Git.
Time for an Industry wide Code of Ethics - Companies dealing in crypto where insiders have access to market moving information, will be smart to start posting a code of ethics on their websites declaring they follow certain guidelines and ethical practices. Modeling these after the regulated industry - as a guide - would be a start. This would start to give the little guy some protection against predators.
With all respect for your opinion, but THAT has absolutely nothing to do with technical analysis in general, and specifically technical analysis of crypto currencies. Technical analysis has to do with using three principles:
-historical price movements that are indicative for future price movements
-following trends (“the trend is your friend”)
-did the market discount everything known?
In my humble opinion, most if not all crypto currencies can be analyzed using these principles, making technical analysis a good tool (and nothing more, let’s not make it more than it is) for crypto trading.
And with all respect to your opinion: All 3 of your textbook examples have nothing to do with my point. Technical Analysis runs much deeper than history and trend.
There is no evidence to support this to be true, in any market, regulated or not. Its anyones guess at best. 50/50
I do agree short term/intraday trends can be used but outside of that narrow period they are useless. But no smart investor would use T/A alone in volatile markets.
Really? Exactly my point. The market knows nothing and can rely on nothing. When it has no access to all the info and dont know who the players are in an “anything goes” environ.
Even for short term its dangerous with crypto, releases or traders with a big wallet (1000+ btc) can easy change the market of many coins. PA will be perfect to use when a coin will get a bigger market cap.
Correct, it is also about what the market has discounted. I think you don’t understand what I mean. Technical analysis is basically about these three principles. I’m using these principles like all traders do (although they might not always realize it).
"The field of technical analysis is based on three assumptions:
- The market discounts everything.
- Price moves in trends.
- History tends to repeat itself."
I would be very curious to hear how you are extending these commonly used definitions “much deeper”?
Yes, your arguments apply to conventional regulated markets and ONLY to those. Dont toss out investopia links they mean nothing, There is no way to use T/A on crypto. 24 hour / 7 day/ unregulated markets, exchanges with no governance. Sorry my friend. There are 22 year old kids with thousands of bitcoin and no experience shaking you down. Be careful.
No it isn’t. All three principles, see my previous posts, can be used in crypto markets. Volatile or not, regulated or not, small or big market cap, that’s all not important to try use technical analysis. If one is not a fan of technical analysis, or doesn’t understand its three principles, or has been disappointed in the past by wrong trading decisions, that’s a completely different story.
Technical analysis can be, and is heavily, used in trading crypto currencies. And it should, by those who think it’s a tool worthwhile using. The tools used within technical analysis however, from MACD to Elliot Waves to Fibonacci, that is up to the experience and technical comfort level of the trader.
OK my friend. Show us your stuff. Work your magic. Do some T/A Bitcoin using Bitstamp. 2 weeks out. Pick a date. Pick a number.
EDIT: Above or below todays avg price?
No, sorry. Not into that anymore, as I said. I can only tell that in 2014 I made good amounts of bitcoin by shorting on the demise of Mt Gox and its aftermath. But holding long Ethereum and selling 55 fold early this year worked, and works, better for me.
Im asking you to prove your theory, not invest. The fundamentals of T/A have not changed since 2014 so if you had the skills then, you have them now. Without the emotion (no risk) it should be easy for you. Ill suggest you cant do it because it cant be done.
Good for you on that Gox win but my guess is lady luck was on your side because that was all complelty fabricated event. No skill needed.
Don’t guess. Try it for yourself, using the three principles. It would add hugely to your learning curve in crypto, I’m sure.
Go ahead. I’ll tell you if I agree or not, and why.
I think your confidence shrunk a bit. But thats OK.
I really respect your both views and you seem to agree on most grounds. We probably agree on (I hope):
- that daily trading is too risky at the moment, specially if you are playing with small figures
- that special events can’t be predicted and that they sometimes greatly influence trading value of a crypto
- that with or w/o using technical analysis, holding long is better strategy for Maidsafe, at least till Network is fully operational
- that there exist several books with extended technical analysis equasions and trends, patterns, … and all those books can+t answer a simple question: “What will be the value of Maidsafe in a month of time?”
Do we agree on these?
I have to agree here with BIGbtc a valuation like maidsafe, factom etc are manipulated and played by whales, TA doesnt work 100% more like 25% if you ask me and i trade crypto every day for last 3 years.
But i do use it cause it slightly increase your chance, but its not like forex markets where the chance is much higher cause there is no manipulation. Forex i traded with Rsi, Macd, CCI, Fib lines, Elliot waves and PA.
i find it hard to believe there is any market free from manipulation, given that the top 1% own half the worlds wealth.
The forex market trades for 5 trillion on daily base, might be some manipulate it i have no idea, but you must be really really really wealthy and have huge balls to play with that amount.
You wish. Patiently waiting for your lessons learned.
Disagree. Trading with appropriate stop losses have kept me in the past from loosing too much.
Agree, though I loved to trade in the old days on rather predictable big events coming. Timing it properly, and judging the flows up and down was a different story though.
That’s personal I guess, I have no opinion on this statement.
Fully agree. Technical analysis is only a tool that is handy for one, and disgusted by the other. That’s fine. But I’ve never met anyone that could and has predicted 100% of the times appropriate (profitable) trades based on TA.
And that’s how it should be used. Always mix TA with common sense and/or guts feelings, is my advice.
You have indeed no idea. As a rule of thumb, EVERY financial market is rigged, manipulated, influenced by criminal traders. That’s why I said that technical analysis is usable for crypto currencies too. It doesn’t matter how volatile, regulated or big a market is. The players are the same, and their motivations are the same.
Please go enlighten yourself on the Forex market, for example.
It feels a bit like everyone is right despite the disagreements.
Almost every market is manipulated (at times), some are never honest - anyone want to take a proper look at silver and gold? They are the most famously and heavily manipulated markets in history, yet a lot of people make money trading them every day and many use TA to guide their decisions.
No TA will ever provide an accurate forecast of anything. No one can see into the future and every market is capable of surprising investors with news and developments.
TA is quite useful and it can be used in any market. It doesn’t give you any super powers and it will give you the wrong steer almost as often as it gives you the right one. The fact that it is right a little more often than it is wrong is all it takes to be useful.
TA is not a ‘reliable’ way to make decisions (in any market), but it is relevant in every market since it seeks to identify trends and sentiment and sometimes it is right.
TA only needs to give you the right direction 51% of the time to be justifiable. We’re all dancing around the manipulation in every market. That said, TA is nowhere near as useful as doing real due diligence and looking at fundamentals imo. If you follow the herd you can pick up a few pennies and TA can help you see where it is going and why. But I prefer Warren Buffet’s take on it all - “Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Warren Buffett, the average is just that — what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world’s.”
I’ve made some cash trading, but nothing like the amount I’ve made from knowing my own mind and sticking with it. TA works, but it is less accurate in smaller markets. Less accurate doesn’t make it entirely useless though.