Looking for patterns in charts is stock market astrology, but technical analysis is a broad term that goes beyond just that. An analysis of 10,000 institutional portfolios found technical analysis provided a small but statistically significant return advantage [1].
Perhaps the way most retail investors or get-rich-quick schemes use technical analysis (looking for patterns in charts) is astrology. But the big boys and institutional investors seem to profit from certain types of technical analysis. Highly reccomended watching this video by Benjamin: https://www.youtube.com/watch?v=ZN6P9ErUcOg
Essentially:
- Chart patterns are uselesss
- TA by itself is useless
- Using TA in tandem with a bigger strategy can (and is statiscally shown to) provide an edge
If you stretch out the definition of technical analysis enough to include any predicting of the future from past patterns of pricing across multiple stocks, then sure market makers both use and profit from TA.
But what people usually mean using TA, IMO does not work at all.
Perhaps the way most retail investors or get-rich-quick schemes use technical analysis (looking for patterns in charts) is astrology. But the big boys and institutional investors seem to profit from certain types of technical analysis. Highly reccomended watching this video by Benjamin: https://www.youtube.com/watch?v=ZN6P9ErUcOg
Essentially:
- Chart patterns are uselesss
- TA by itself is useless
- Using TA in tandem with a bigger strategy can (and is statiscally shown to) provide an edge
[1] https://scholar.google.com/scholar?hl=en&as_sdt=0%2C22&q=Hea...