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Debunking 8 Myths about Technical Analysis

Technical analysis is a means of examining charts and price movements. This examination can be used if applied correctly. In this regard, many experts think that analyzing the charts and price movements can provide all possible information required for trading.

While some others believe that the study of charts and other technical indicators can’t help in predicting market value,.

Do you believe in the efficiency of technical analysis? Or do you think it is just an unnecessary study of charts?. So if you are in this kind of confusion, let us debunk some of the biggest myths for you about technical analysis.

debunking myths about technical analysis

Myths About Technical Analysis:

The success rate is low:

Many people think that there is a low success rate in technical analysis. People have the substitution that technical analysis produces poor results. While many traders and technical analysts made a huge profit from technical analysis.

For example, Jack D. Schwager’s book Market Wizards: Interviews With Top Traders (Wiley, 2012) includes interviews with a number of experts who have made money by utilizing technical analysis.

This reflects the truth about technical analysis, which is hidden in misconceptions. Many people lose their money due to greed in the financial market. If you have proper knowledge and experience in the finance world, you can also make huge profits and fortunes like the experts who have made it.

Accurate prediction of the market:

A large number of traders and technical analysts have the misconception that they can predict the market perfectly by using technical analysis. While the market can never be predicted 100% perfectly because changes occur in the market continuously with the passage of time,.

There may be changes even if the expert trader makes the prediction. Technical analysis can only give a range of predictions with profit margins. But it cannot give you the exact number or prediction. You can make profits on the basis of your skills and ability to understand the activities happening in the stock market. 

Besides predictions, you need to understand other factors on which market movement depends, like price movement, previous charts, and graphs.

Technical analysis can replace a good trader:

It is the biggest myth about technical analysis that it could replace the traders.If automation could do everything, then there would be no more humankind. The people who hate technical analysis and the inexperienced traders believe that technical analysis gets all the jobs of analysts.

Actually, they give their argument without knowing that the evaluation of risk and other factors requires the human brain. It is true that technical analysis is automated, but to give commands and make important decisions, human strategies are needed.

The way in which an expert trader can assess risk and reward better than any computer software. The results that a human touch can bring, no computer program can do.

Technical analysis can make you a millionaire quickly:

Many people start learning technical analysis with the belief that it will make them millionaires in just a few days, while it is not true in any aspect. Technical analysis is a process that requires time; it can’t provide results within a blink of an eye.

It will give you positive results only if you are using it properly. If you read the journey of a successful analyst, you will come to know that they spend time on it, and only with hard work do they achieve their goals. 

It is not a magic wand that could make you an expert and a rich man in just a second. So, it is another myth about technical analysis that should be debunked.

It is meant for day traders only:

Some people believe that technical analysis is just for traders, but that is not the reality. Investors can also use it for stocks. In the days when there were no computers available, everyone, including traders and analysts, used charts. 

When they want to buy and sell the stock, they use the charts, which can be easily understood by everyone. So it is a misconception that technical analysis is meant for only day traders.

Technical Indicators Can Be Applied Across All Markets:

There are also some people who think that technical analysis is the same for all kinds of platforms. It’s true that it is used in many other markets, but that doesn’t mean that it works the same for all markets. 

Each market has its own specifications. Stocks, options, and others all work differently. If the same tricks were used for all markets, it would result in a big loss. So, it’s important to not use the same strategies and tricks for all markets. 

Each market has its own working strategies, so you need to choose the right tool for each market.

Technical Analysis Guarantees Consistent Profits:

Some traders wrongly assume that a perfect mastery of technical analysis ensures profitable performance on the market. But making money on trading is not that simple; it involves a lot of things, such as risk management, emotional discipline, and market awareness. 

However, as powerful as technical analysis is, it cannot guarantee success on its own because there are many more things than chart analysis, and one of them is certainly psychology and asset management.

Technical Analysis Works Equally Well in All Market:

Others argue that technical analysis is equally applicable in any market, whether bullish, bearish, or a mix of both. This is, however, not an absolute truth. 

Technical analysis tools and strategies perform differently in trending markets and ranging markets. Trading is successful when market conditions change, as it helps traders adapt.


Finally, the authors believe that it is necessary to debunk myths about technical analysis for traders. Although it provides insight into changes in the market, it is not all-knowing and cannot be relied on to predict markets or actualize instant wealth. 

Success in the field of technology is dependent on technical know-how, risk management, and emotional discipline. Being oriented, the elimination of the myths lets traders understand its strengths and weaknesses. Moreover, it is necessary to learn by integrating several strategies to be in control of their actions.


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