Technical analysis vs Crystal Ball

Hey guys,

I wanna touch a subject here today. Over the year(s) i've heard many things in regards to TA. Things like "it doesn't work", "anyone can draw lines", "all it matters is news" etc.

Well it's all true, in a way. TA is not the ability to posses a crystal ball. I you or anyone else who's doing it doesn't know where the market is gonna go (unless you're superwhale and can move the markets). But what TA is is an oversight on the market. You can get the general idea of market movement by drawing trends, supports, resistances, fibs etc. It's not 100%, but it's what traders do. They know they can't predict the future, rather they can try make trades based on information they have and eliminate errors (trade when the odds are in their favor).

What i've learned is that most of the times news follows TA. Take this bitcoin run for example we had an inverse h&s forming which is bullish (hell, it might be misenterpreted wrongly but it worked). As soon as that second touch of 6150 happened news started flowing in. Positive news, etf, coinbase etc. Same is with major drops (hacks and general fud which happens to be untrue 90% of the time).

You need to understand that trading, poker, sports betting go hand in hand. It's a zero sum game. In order for you to win someone else has to lose. Yeah i know what you're gonna say: "i'm investing, not gambling". Face it, you're gambling. You're putting your money at risk and can potentially lose it (all). Why did I compare it to the two? Well same principles apply:

1. Discipline
2. Money/Risk Management
3. Abilitiy to learn from your mistakes and work on them
4. Don't chase your losses
5. Don't let your emotions control you
   ...

One last thing i have to point out in regards to TA: TA is simply a tool for increased edge over the market. It's great if it can be fundamentally backed.

Let's take sports betting analogy: Say you want to place a bet on the match. Odds are 2:1. That gives you 50% probability to win right? Yes right in theory (let's forget juice for now). So you have a team A who you're willing to back to win at 2:1. You do your research before betting and realise that this team played vs team B 5 times in last year and won 4/5 times. Also this team plays at home where they've won 7/11 matches. So is this a good bet? yes. Does it matter if it loses? no. You can't win 100% of the time because if you did bookies would be dead. Look at long term instead, if you do this same bet 10 times in a row you'll be in profit i guarantee it. Same is with TA, you can't be right 100% of the time, but you can try and be right most of the times. If risk/reward ratio is in your favor take it, don't let your emotions control you.

Thank you for reading :)