I often hear statements like “crypto technical analysis doesn’t work”, “too much manipulation here”, “alt technical analysis doesn’t work”. It always amazes me. Well, yes, probably just like that, thousands of people are engaged in trading, some of them are professional, and they make fortunes on it. But how can you consistently make money on something that does not work?
The answer suggests itself
Maybe it's the people themselves and how they use this technical analysis? As elsewhere in life, it is not the fact of use that is important, but how skillful it is to use it. You can draw a parallel with poker - you won’t earn money there either, without having a colossal knowledge of the game and correct psychology. Luck? No, the difference is precisely in the skill of applying knowledge.
Technical analysis does not give 100%, but allows you to predict the most successful scenario and prepare for all the rest. I will say even more - in order to earn, technical analysis is not even obliged to give 50% successful deals. 60% unprofitable transactions with proper risk management is enough to trade in plus.
What is TA?
This is an interpretation of the price chart in conjunction with other data that allow you to determine the current demand and supply in the market. The most popular patterns (GiP, trendlines, levels) are noticeable to many people, and the crowd happily attacks them, the task of the trader is to correctly interpret the price behavior. It depends on the interpretation whether there will be a signal for a trading action or not.
The task of technical analysis
- on the basis of accumulated experience and knowledge (patterns), look for the safest entry and exit points, which together with the proper risk management give the trader a profit.
Therefore, I can safely say that technical analysis works in the right hands and copes with its task. He GIVES points with the best risk to reward ratio. But trading is not only TA. It is also psychology, work on mistakes, position determination and risk management.
And if you climb into the trade without knowledge, trust the opinions of others, do not observe the risks, do not analyze the mistakes - no technical analysis will help you. I hope you understand that your main opponent and the main reason for not working TA are you.
If you want to outperform the market, you must be ready to outperform 90% of its participants, therefore, you must be prepared more than 90% of its participants.
That's when technical analysis and everything else will work.