Do you guys practice Stock Astrology? If so, let me know why down below!

I used to think this way, but discovered quickly that I was very wrong. One of the reasons technical analysis works is because people use technical analysis.

The deep irony is that this guy is apparently serious and hasn't understood that quant trading IS technical analysis.

ALL models (including quant) are based on previous data, by definition. Anyone who uses a model of any kind is essentially engaged in technical analysis, whether it be a price chart, an income statement, or current order flow.

Let’s not forget that the biggest payouts in the markets don’t come from great performances but rather it’s great promotions. Stay invested, diversification for streams of incomes is very important

My lazy ass would love a video where you go over the empirical evidence.

This guy ain’t got a clue what he’s talking about. He wants us to die for his sins.

1:10 if prices are indeed random, then there's no edge you can possibly have, whatever other data you're using as a quant would be equally as worthless

I use fundamental analysis mostly, but i did start from TA. I've read a lot about it and what I can say is that you don't really understand TA yourself. And probably what price is also. Price is not value and these are two different things. Prices include emotions.TA focuses on these emotions, which can be visible in the price chart.

technical analysis is not used to predict the future, but to read the present market.

The kind of technical analysis which does work to a certain extent and is used by hedge funds and asset management firms is completely different from what retail traders do. One of popular class of methods is statistical arbitrage. A lot of asset management companies use price volume data to mine alphas and feed them to machine learning models which in turn generate signals for trade. These are the methods which work (but not 100% of the time of course) so far as "technical analysis" is concerned. All other stuff that retail traders do is considered a joke in academia. But that doesn't mean it will never work. If a lot of people are following the same method/signal to trade, regardless of whether it makes sense or not, some will surely make some profit at some times.

Price isn't random. It's based on people and bots people program. People are predictable.

Why focus on a single indicator? I use 200 sma, rsi, macd, volume, & 20/50/100 ema. Psychological support and resistance is real. Price is not truly random in the long term.

If you do not understand something doesn't mean it doesn't work. Technicals and fundamentals are different things, they are part of a whole. Best traders don't only look at a chart only but they study the sentiment, news, fundamentals, psychology of the market, indicators, long term market regime and then the chart. This cannot be quantified. It is so easy to create a MACD based algo strategy that makes money, once you understand how the markets work, the risk and randomness of the markets. Prices cannot be predicted but you can control your bets and position sizes. Patterns exist, the market is so full of trading algos right now that they often repeat patterns in the market, when they apear they can be traded for a short period of time.

Maybe you haven't looked hard enough or your definition of technical analysis is different.. For me TA is to be able to find a risk defined entry point that gives me twice the reward and has a strike rate of 5/6 on 10...it's good enough to build a career.. It's a lot of work but it possible.. And yes pattern recognition helps.. Doesn't work everytime.. But it doesn't have to. Just enough so you're striking 5 on 10... Took me 4 years to figure out a system... But it works now....week after week.. Same boring process but effective.. Just manage risk, that's the only thing we can control. Trade outcome is random.

The most important counterexample to your position is the performance of james simons' medallion fund. But I agree that most retail traders should not be trying to use technical analysis to try to beat actual quant funds at their own game. In fact, if people stopped trading stocks at all and just bought and held the index, even the medallion fund wouldn't be able to make money.

Hopefully, you traders see the flaw in his argument. 3:40 He stated clearly that he "knows" price action is random. In 4:59 he also stated that he understood that price is subjective (meaning price action is based on the observer). At 2:40 He also states that people are hard-wired for pattern recognition. At this point you should see why the opinion in this video is flawed. Value (price) is based on the observer. We are social observers (group observers) hard-wired to recognize patterns. What appears to be randomness in price movement is actually a product of the competing intentions of social observers. Various groupings of social observers define price movement. The intentions of those observers with the most strength (volume and/or capital) will dominate price movement. Herd recognition and response to these movements creates more pronounced patterns. Based on group pattern recognition, the direction and duration of short term price movement can be reliably predicted with an accuracy above 60%.

"Quant Lead" gives me "Tech Lead" vibes, shivers

What I find interesting about TA, is that in the short term if everyone concludes that a stock has a particular trend (like up), then that will create buying pressure and momentum. So it's not entirely true to say that past price has no effect, because if enough people believe it does they will trade off that and it becomes a self fulfilling prophecy. Having said that, it can turn on a dime so maybe there is an element of randomness too. My hunch is that Ito calculus is a better mathematical model for price movements that something purely stochastic

When there are thousands of people involved there is most definitely a trend! TA is basically learning what the pack is about to do. TA works really well if you can see patterns in creature habits. The reason we have resistance and support lines is because we have thousands of people thinking the same thing and drawing their lines on the same chart. Sorry bro but I used to think like you! It’s not about price at all. It’s about human nature.

I completely agree with you in everything you have just said, thanks for the effort you are making to popularize the quant trading.

The very fact that people believe in chart analysis is enough to prove it has value - if we know people are buying based on patterns, all we have to do is look for those patterns and we know that other people are buying and selling based upon that pattern. If we know that a bunch of people are going to see a pattern and act a certain way that impacts price, that’s just another catalyst for our decision making. Think about it - if people believe a pattern is a bullish indicator, they’re more likely to buy which makes it a self fulfilling prophecy. All you have to do is see this pattern before others catch on and front run them.

09:00 the head and shoulders pattern is a pattern that indicates a potential reversal zone, that does not mean that the price will necesary change its direction, it is usually used as a filter to avoid trading in those situations.

Unfortunately for your viewers, there is a lot of misinformation in this video, and also a lot of assumptions on your behalf about people you dont know, including a ton of generalities that are dangerous if you actually believe these things. Technical analysis is so much more than the things you mention and works for reasons you didnt even address. I was actually hoping this was going to be a good watch.

How is the technical analyst saying when bitcoins weekly trend turns up statistically speaking it is a good time to ladder into a position,(or for that matter ladder into positions on the weekly up trend in Bitcoin when the 3-day stochastic crosses up) different from a quant coming up with a model?

Agree TA can't predict future prices however it can be used effectively to manage trade positions.

Exactly . It goes like this and I know it from my teacher in Uni who is a trader . "If you trying to find a pattern , you will.. eventually"

I agree with you on the "only using a single indicator" part. Something that you have to know though is that people can actually create an idea on where price is heading to if they do it correctly. Technical analysis isn't only about chart patterns too. There are different techniques that I use (Not only indicators, my trading plan doesn't use many) in my trading strategy that can earn me profit if done correctly. Obviously, Price action alone isn't very effective, but if added with fundamentals, I think if the person knows what they are doing, and isn't just using one simple indicator they can earn profit.

Hey CJ, I get your points. A lot of quant trading is overfitting on past data and finding patterns in randomness. Just one question, if price is 100% random, then why can it still be statistically differentiated from a random walk? Think about the ADF test, Hurst exponent and variance ratio test. I am fairly new to the world of quant finance.

How are you defining TA? Like using indicators? Also, would you consider this TA or a quantitative approach. For example, lets say you back-test a strategy on historical data and find that 70% of the time when a stock gaps up 50% pre-market, there is a dip at the open and then a 10% spike, so every time you see this you buy the dip and catch that 10% move. Just curious if you would consider this quant or TA

I am a individual trader which HFT platform would u suggest me to use my automated strategy i tried MT4 but it was too slow and didnt execute orders on time also on wrong prices ,please suggest HFT platforms.

Any advice for trading options I'm a scalper and I do use technical analysis?I trade off volume and support and resistance not to many indicators because there all lagging.Any advice or websites for scalping and swinging options?Just found your channel your great !!!!

Don't you think small prices movements can be predicted with trade flow imbalance and order flow imbalances ?

These kind of videos help me to keep my price action trading edge forever. Thank you. I love them people who didn’t put enough work in technical analysis try to convince others that TA doesn’t work. Just because you didn’t manage to make it work, it doesn’t mean that it doesn’t work. Anyway, you do you, I will keep using my garbage TA :-)

I once heard Jim Simon in an interview say future prices (to some extent) can be predicted from past prices and that absolutely makes sense to me. You can't expect prices to respect every S&R level every time - else every trader will become a billionaire. But the fact that you still see prices respect these past levels many times is enough to know that TA does actually work to that degree. A simple observation of price trending along the RIGHT moving average alone shows a pattern of movement - either downward or upward. If there's such a defined pattern of movement, then I wouldn't say prices are random since you now have some degree of confidence interval.

I never liked and understood technical analysis. Except few years ago, I had a class for risk management at university, taught by two professors that are phd in mathematics and worked in the industry for many years. I was surprised to find out that they never looked at the chart, and all the TA was done using mathematical formulas in excel and were backtested again and again using small adjustments, and those "patterns" are actually betting on statistical chances. I see your point and I agree, but you assume that the efficient market hypothesis is true, while technical analysis is created on the basis that the markets are not efficient and there is no point on in trying to understand the market since information is not accessible to everyone.

We tend to agree. however there are certain patterns which most technical analysts agree on and this in itself creates short term moves in predictable directions. Admittedly longer term they do not necessarily play out but if all analysts believe that a price is going to rise off say the 20 day EMA then they will all take similar positions causing the price to rise - for day or hour traders that is all they need. That said we are great fans of DCF valuations - but this is more difficult in the crypto markets for example where currently its almost impossible to assess future earnings for most if not all cryptos.

This guy is extremely ignorant, tell that to all of the consistently profitable traders that use patterns constantly, including me. Of course we use multiple forms of confirmation but to think you need to focus on some “investing” thesis is just plain stupid.

What do you use when developing your Quant's what is it based on? Do you not use technical indicators?

I started with TA even after having an MBA in Economics, but soon I realized I was spending too much time trying to read charts and was getting stuck. Since I started learning fundamental analysis and buying and holding, the profits came, with less time in front of a screen.

Yes , while technical analysis doesn't work , but most traders use it (T/A). So me as a trader I keep my fingers on the pulse of these traders (who use TA) by watching the TA on charts to see what the masses (traders) are thinking, and I act before they do , because I know what they're thinking when they're watching their charts. Trading is psychological , put yourself in the minds of traders and know their move(buy or sell) before they even come to their own conclusion and act before they do.PS: always put your mind into what the masses are thinking /seeing while ignoring your own thoughts . Its like "ask the audience "on that game show, and you'll be right more often than not . Also , prices are random , but people aren't , humans are creatures of habit. This is the end of the lesson .

1) Work on discipline, risk management, and trade stop hunts paired with higher time frame analysis. 2) Laugh your way to the bank while watching this vid

I am a researcher and a trader - I agree price is mostly random, most of the time. We use ML method to squeeze out potential profits, holding many positions and let the statistics play out. Technical analysis works IF a trader is exceptionally good (like you said, different traders will read different patterns). The tool is like a pencil and not everyone is an artist. One can say the same for any ML methods (which mostly don't work if all they do is throwing data at it)

One thing you'll see alot with TA "analysts" is saying things like "it needs to break through resistance to go higher" or "it if breaks support here it will go lower". In other words "it might go up or down" and there's no scenario where they are wrong.

But given that many people trade based on technical analysis, isn't that creating its predictive value? The head and shoulders example isn't a good prediction for a price, but it seems to confidently predict a thiker order book which in turn could be used to get a better price for a high volume order or something. I mean in essence, isn't a big chunk of the market just human psychology?

Bro I study artificial intelligente for about 3 years, I have a firm, and I can absolutely tell it does work. Even if you plug in an artificial intelligence to the chart it soon finds out the same exact pattern found from other human analyst. You are saying algo trading does not exist, this is crazy.

So, you write your trading bots or whatever based on what? TA etc right? does that means the bot is garbage as well?

Technical analysis tells you when to buy and fundamental analysis tell you what to buy.

I respect your advice but I have a question: aren’t you bound by Disclosure Agreements not to share your experience on Public Platforms?

I don't know what kind of experience you have as a quant, but you really couldn't be further from the truth. Just some background for you, I've been working as a quant for nearly a decade and have experience across a broad swath of Wall Street banks and boutiques. Furthermore, I currently run a consulting firm. Many others have already stated many truths, but on top of that, tech analysis is used as part of a stack for advisors, traders, and analysts. That stack is comprised of chart reading, fundamentals, and all the fun quanty stuff that's involved with designing, backtesting, and possibly implementing of specific algos. It's not a perfect science with respect to accuracy and linear predictability, then again, no system is. If you were worth your salt in your field you would already know this. Technical Analysis is an entirely separate field from HFT, especially if you have worked at a prop firm, this is common sense. I really hope that if anyone is to gain anything from this video, it's that you have no actual idea what you're talking about and you're not worth a subscription nor additional views for spreading misinformation. Literally every major bank and firm I've worked at leverages TA to some degree for various reasons.

The guys says that the definition of price is the present value of its future benifits/cash flows/returns and technical analysis is the inverse of it. But future cash flows/returns itself are predicted/calculated on the basis of past data.

i'd argue that sure prices can be random, however they will generally follow a pattern of randomness, within a given range of randomness, which can be predicted, so although you cant predict exactly what price will be reached by a given time, it's entirely possible, at least theoretically, to predict the range in which that price will be

If this is true why does using KDJ increase returns by around 90% vs buying and holding during the same multi-year time period?

As a trader, your statement "...prices follow a trend if you believe prices are not random, prices are indeed random." is a yes and no. Prices are indeed random, its the individuals who partake in the markets that make it "not random". We as traders look in the past to identify places where more people agreed that prices are a good price. We as humans implement fear and greed onto the charts in other words supply and demand. As a trader, I identify those areas and assume based on past history that these areas will play a role in the future. That's all it is. Yes prices are random, but the people trading the markets have patterns that we can clearly take advantage of.

have you done your own extensive studies, or do you rely on studies others have done?

How does one reconcile what is in this video with the fact that Medallion fund's performance " ... averaged a 71.8% annual return, before fees, from 1994 through mid-2014."?

You pretty much lost me when you mentioned that prices are random. Human psychology dictates prices and a chart is nothing more than a representation of the market participants’ psychology. Chart patterns can potentially determine how greedy or fearful the participants may feel at a certain point in time. Does it always work? No. TA is about probabilities and in no way is some kind of crystal ball that 100% predicts what’s going to happen. Look at it as a tool that can be used along with fundamental analysis.

TA could be a good simple exemple of a feature extraction tehnics, like simple example of a base signal Many of these series can obtained with different ML or Fourier function aproximation

jesus please tell success rate of the prediction by AI/ ML models for index options trading for day trading work ? if yes which models and how and why and if no please share

I tried feeding prices into several different neural networks and couldn't find any pattern so I'm doubtful their is any.

the traditional way of looking at the prices with indicators doesn't really work. But the point is to have some probability at start and then adjust the portfolio as the prices move. it is wrong to say everything about technical analysis is crap. Best strategies are always simple but what makes the whole thing complicated is how you move your position given the large sum of money. buying a stock because of a MA cross over may not make money. But quite honestly, prices are not that random. At least to me, if you pick 5 good mangoes out of 10 from a basket, it is safe to assume that the 6th one would be good as well. of course you can go wrong. but with that probability, given the large set of trades you make, you have a more than average probability to win.

The point of of technical analysis to have a idea of where traders/institutions/etc believe a product is oversold or overbought. No system is fool proof. But technical analysis, with good understanding of fundamentals, a proper outlook and experience increases a trader's edge. Thank you for you post, Happy trading.

So tell me what i want to do?

It is always satisfying and amusing to hear when people say this. Every day I can see the next trade and it is obvious in many cases using a form of technical analysis. (reading charts) Often people who are not able to see what is obvious and learn to trade, will say that it is not possible and that makes my work even more valuable. Best of success and happiness in this approach!

Sat here listening him talk about fundamentals whilst trading crypto... huh

Here’s my TA. Buy low, sell high.

If I master python what job position do you recommend?

What if i buy 3 month options in the direction of the market? Is that day trading?

Data produced by a stochastic proccess of predefined rules can be plotted in a certain distributions, yet it's not purely random.

Price is not random. Price is controlled by it's manufacters (Central Banks) and it's delivered through a Interbank Algorithm that is detectable and tradable. I repeat, the delivery of price is not random.

After a lot more experience, I would say that today the main reason technical analysis doesn't work is that it is too accessible and the only thing to come of it for the average guy will be paying commissions, at the best, and losing even more at worst.

What about TA+machine learning to optimize? I’ve heard this technique works well. Optimizing values at least optimizes probability based upon TA.

When you look close enough you'll always find order within chaos. The charts are full of information you just have to be clear with what you are looking for. And it's not ease at all that's why people spend years to find their edges and learn to master them. At the end of the day it's not about who is wrong and who is right, its all about making money.

One of the best definition of price that is perfectly consistent with main stream modern finance that I ever heard!

So what do you recommend over TA?

Can you combine algo trading with chart reading?

Wow you’re absolutely right. I’ve been in the quant rabbit hole and I agree with you

I dont know what people smoke to see hammers, tea cups, head & shoulders in the price movement.

so the algorithm that runs the markets is random ? and past supply and demand zones don't mean anything and are just random ? liquidity levels that institutional trades use retail to fill their orders is random ?

What do you think about aikido finance as a trading tool?

Prices are not random. I call trades almost every single week.

Hey, man! Great video! So, do you believe in fundamental analysis?

one of the rawest and most enlighting youtube video I've seen this years (see decade). Thanks !

Is supply and demand trading the same as technical analysis?

Well said! Nicely done. Now the hard part, getting a generation of Robinhood traders, who have only ever seen the greatest bull market in history, to understand this.

Question : What does quant do different?

Day traders do not believe we predict future prices. We don't think that of it that way, at all. What we know is, millions of other people recognize the same patterns, using the same indicators respond accordingly. When millions of people see the ticker approaching (resistance) many take profits or exit their positions because we know millions of others are doing the same thing. We're actually creating the support and resistance collectively. It's not a prediction

Someone doesn't like charts.... Did the chart hurt you? Hows the chart make you feel?

But when all the market follows technical analysis it becomes a self-fulfilling prophecy. There are also psychological elements to price action, such as resistance levels, which technical analysis is based on.

TA patterns are part of the same subset of patterns quants use, so defining them as garbage basically defines quantitative analysis as garbage. If prices are completely random there is no point of trying to quantify them and basically your job is a joke. You must be kind of not have an intuition about math to not realize this basic principle. Quants have their own kind of astrology, for instance defining volatility as risk, not because it's true but because they don't have any other way to quantify it. As Warren Buffett explains here: kzfaq.info/get/bejne/f8uIZbCaxp-oe30.html

Enjoyed the video. So then what is the alternative?

After watching this guy I’m thinking I might actually be smart enough in finance to make a algo. Thanks for the confidence!!

By calling the entire TA garbage just to prove a point about scammers selling it is ignorant. TA is simply a statistical tool (MATH) to get odds in your favor. Any good TAnalyst will tell you that it is no holy grail. TA also respects the random walk theory and also any other theories out there. TA is not just about historical price movements to predict future movements, pattern recognition, etc like this guy claiming. It is understanding what other investors/traders are also doing currently. It is also a measurement of exuberance, fear, and greed in the market. There is a reason why this guy is a KZfaqr(no different than others selling TA services) and successful traders are simply traders. Skilled traders do not need any services; these services are made for the lazy ones. Think! TA works, Quant works, Fundamental works, Buy-n-hold works, etc. You will find everyone in a different school of thought that has been successful based on their individual personality and lifestyle. Do not be ignorant like this guy.

Is this guy serious? been trading for a living for years and technical analysis is what i used all the time. But the pros who win consistently combine it with market analysis, money management and effective emotional management. Technical analysis is important, but it's only 1/4 piece of the puzzle.

So are you saying I shouldn't waste my time studying technical analysis, because I want to start learn stock options trading. Any advice?

While a certain amount of randomness does exist, it's unrealistic to believe that ALL price movement is random. You can verify that empirically. And logically if prices are random and unpredictable how can trends exist? How can bull and bear markets exist if trends don't exist?

Crypto investor here. I can tell you some of these tech analysts do look at several indicators at once, not just one. They also look at many other factors at play outside of the charts, the market dynamics, macro economics, business fundamentals, and even the psychology behind investing trends. Not saying I would pay $700 for a Tech analysis course, but if someone has made 10 to 20 times more money than me investing, I sit back and listen.

I watched this video and another one called "why i dont day trade" and I have come to the conclusion that you have absolutely no idea what you are talking about. Sad Case

Sir, I'm a High School (12th grade) student from India aged 17. Please tell me how to become a Quant Developer like you? I don't have any guidance. Please.

I'll be honest, as a technical base Trader it is hard to agree with a lot of points made, but at the same time you're not wrong. I only say that because I have found consistent profitability in the Market within my strategy, interpreting the charts through technical analysis. To each their own I suppose