I stopped using technical analysis over two years ago. It was something I learned during my early years of trading, and it's something that most new traders learn along the way too. I never considered a world where I wouldn’t use technical analysis in a trade, but here we are.
An example of a trade from my earlier years. Yuck.
In late 2020 I had a discussion with another trader who goes by the name of "Mark". We were discussing risk management in trading, and what we use to determine our entries. Earlier I had posted a screenshot of a trade I made recently, which included a chart that had a number of indicators on them (I had used these indicators as information to enter and exit my trade with). I highlighted the trade to show how some specific EMA's were important during a downtrend, as they often predicted where the bounces would go (the price would hug the EMA's as they moved up).
Mark has responded with his opinion that the information I used (technical analysis) was simply an illusion and nothing more. Mark was a profitable, full time trader who I had come to respect. While I wasn’t happy with the dismissiveness of information I had used for years, it lead me to reconsider the information I was using. What if he was right, and all of this was simply a coincidence?
An excerpt of a conversation about technical analysis with another trader.
His dismissiveness of technical analysis led me to begin focusing on other aspects of trading. When you ignore technical analysis, what’s left to focus on? I began focusing on other factors like price action, volume analysis, trend following, and “reading the tape”. Instead of focusing on things that happened in the past, I started to focus on things that were happening in the present.
Since I stopped using Technical Analysis, my trading has improved tremendously. I am very grateful for the advice I received from more experienced traders, as it made me become consistently profitable at a much faster rate than before. I began to understand why price behaved the way it did, what moves the market in a given direction, and how the game was played at a deeper level. In hindsight, technical analysis made me miss the forest for the trees. What moves a market in a given day, large size hitting the order book, or two EMA's crossing over?
Note: An important aspect of trading is 'what works for you'. If someone trades with technical analysis, and has a profitable system using it, then they should continue to use it. You do not want to stop using a system that brings you consistent results.
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