A Successful Technician

In order to be a truly successful (Market) Technician, you must truly STAND OUT. You must stand out not only for your CALLS on your stocks, but also your method of analysis and guidance. The only way to stand out is to practice Technical Analysis in a manner that is different, unique, and more insightful than basic Technical analysis (as defined by academics, market participants, and the MTA). This type of standard analysis can be performed by most who study the subject from an amateur’s point of view, and therefore is worth little value, if any at all. Since Technical Analysis is inherently subjective, and methods of analysis are typically faster and “easier” in the public’s minds than Financial Analysis/Modeling, for example, there is not only less demand, but actually fewer insights produced since the cost of producing the analysis is much lower than the cost of producing financial models (due primarily to the requirement of increased experience, education, training, and obedience of established financial rules.

 

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It is only logical that someone whose duty it is to produce accurate and complex financial models should be paid higher wages than one who must merely look upon price charts, even though in reality it is much more complicated that this (some percentage will always be non-believers). If the cost is lower, the value of analysis must also, as a sin qua non, be lower as well. Not only are the costs and value of Technical Analysis less than financial analysis costs and value, but the results are not immediate, possibly not available, and sometimes not even quantifiable. This is diametrically opposed to the process of financial analysis, which can not only be immediate upon completion, but can be tweaked or modified based on conditions and scenarios.

 

This type of financial analysis also lends itself to “perfect” quantification in terms of hard-and-fast numbers: profits, margins, costs, etc. whereas Technical Analysis does not deal with these types of projections with the exception of price. Financial analysis is the “here and now” and the “hard reality” of the investment world, while Technical Analysis is the “here and tomorrow, next week, and next month,” as well as the “imaginary future.” Why is it that financial projections would be the “hard reality,” while technical projections are the “imaginary future”? It is perhaps because while financial projections are modeled on the current numbers and extends them forward, technical projections are based solely on supply and demand (price), at the present moment. It would appear as though using price to project price, rather than financials to project price, is a more impossible feat and a fantastical concept. Yet it is indeed possible to gauge not only the supply and demand of a stock at any given moment, but also to project that calculation forward and assume likely future price (aka supply/demand). Yet for all their differences, both are not exclusive of one another, and many successful investors practice a hybrid of both Technical and Fundamental Analysis.

 

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