Technical Analysis - 1 specific and 1 general question

[SonofJen]

1) I read an article from a few months ago regarding advanced fibonacci applications link and was wondering if anyone regularly uses these techniques and with what level of success. My initial take is that EITHER these techniques are interesting from an academic standpoint but perhaps not incredibly practical OR that they are actually practical but only when used in conjunction with other techniques. I'm still fairly new to TA (read: I'm still in the reading and learning phase) but it seems that any one technique used just by itself is only so so but if several indicators all point to the same conclusion than the analysis becomes much more insightful and valuable/profitable.

2) Is it at all common for business school finance programs to teach technical analyis or is that usually something someone must learn on their own (or on a job). From what I can tell it looks like the emphasis at the university level is strongly weighted towards fundamental analysis.

[GeorgeF]

As far a I know little academic TA research is done. When it is done it is done by the Math, Eco, or Psych type departments.

You should note that business school is supposed to teach you how to run a business. Finance programs teach you how to finance a business.

FWIW TA is like poker; Only a few can win at it. Business can on the other hand allocates resources so that all participants are winners.

[Wes Mantooth]

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...My initial take is that EITHER these techniques are interesting from an academic standpoint but perhaps not incredibly practical OR that they are actually practical but only when used in conjunction with other techniques.

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I am sure they are at least some what actually practical but like most TA practices when used in conjunction with other TA techniques.

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2) Is it at all common for business school finance programs to teach technical analyis or is that usually something someone must learn on their own (or on a job). From what I can tell it looks like the emphasis at the university level is strongly weighted towards fundamental analysis.

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The last sentence is about 98% true.

[SonofJen]

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As far a I know little academic TA research is done. When it is done it is done by the Math, Eco, or Psych type departments.

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Perhaps I should have used the word "theoretical" instead of "academic" in my first question.

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You should note that business school is supposed to teach you how to run a business. Finance programs teach you how to finance a business.

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In general, I agree with you but I guess I was referring specifically to the various "security analysis" classes generally offered through the finance programs of those business schools. In other words, I'm not going to business school to learn about investing/trading but as long as I'm there it might be interesting to take an elective in something that included a study of technical analysis if such a class was offered. Another reason this question came to mind was when I looked at the book Technical Analysis of Stock Trends (Edwards and Magee). It's clearly a textbook so this material must be taught somewhere, right?

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FWIW TA is like poker; Only a few can win at it. Business can on the other hand allocates resources so that all participants are winners.

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Perhaps trading (instead of TA in particular) is more like poker in that there is more than one way to show a profit. Both endeavors (granted I know much more about poker than trading) involve an art and a science and I think that is why people in these forums are attracted to both.

[Sniper]

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1) I read an article from a few months ago regarding advanced fibonacci applications link and was wondering if anyone regularly uses these techniques and with what level of success. My initial take is that EITHER these techniques are interesting from an academic standpoint but perhaps not incredibly practical OR that they are actually practical but only when used in conjunction with other techniques. I'm still fairly new to TA (read: I'm still in the reading and learning phase) but it seems that any one technique used just by itself is only so so but if several indicators all point to the same conclusion than the analysis becomes much more insightful and valuable/profitable.

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Fibbonacci techniques are used regularly by advanced TA traders. I highly recommend that you understand the more basic TA concepts first, before learning how to appropriately use the more advanced techniques.

Before you start digging into Edward's & Magee, you might consider reading Charting by Michael "Tiny" Saul at Trendfund. It is a great intro to TA type book, that will form a strong basis for further reading and research in this area.

[SonofJen]

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[ QUOTE ]
1) I read an article from a few months ago regarding advanced fibonacci applications link and was wondering if anyone regularly uses these techniques and with what level of success. My initial take is that EITHER these techniques are interesting from an academic standpoint but perhaps not incredibly practical OR that they are actually practical but only when used in conjunction with other techniques. I'm still fairly new to TA (read: I'm still in the reading and learning phase) but it seems that any one technique used just by itself is only so so but if several indicators all point to the same conclusion than the analysis becomes much more insightful and valuable/profitable.

[/ QUOTE ]

Fibbonacci techniques are used regularly by advanced TA traders. I highly recommend that you understand the more basic TA concepts first, before learning how to appropriately use the more advanced techniques.

Before you start digging into Edward's & Magge, you might consider reading Charting by Michael "Tiny" Saul at Trendfund. It is a great intro to TA type book, that will form a strong basis for further reading and research in this area.

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Thanks for the recommendation. I'll check it out.

[Mr. Now]

You might pick up John Murphy's TECHICAL ANALYSIS OF THE FINANCIAL MARKETS to learn modern TA.

TECHNICAL ANALYSIS from Edwards and McGee is the classic but somewhat dated foundational text if you want to make sure you have the full story.

Fib analysis definitely has its place in TA, especially regarding price retracement. It's sometimes uncanny how often price actually bounces or rests at precise Fib levels. One reason Fib works is because the chart reflects crowd emotions (always primitive, by definition) and associated behaviors.


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