Myths About Technical Analysis

Technical analysis like any other form of analysis is surrounded by myths. Firstly, it is said that past prices have no connection with future prices, which is true in part but false to an extent too. Past prices are entry points for an investor and it is this price on which an investor decides his future exit or additional buy decisions. Second myth associated with technical analysis is that it does not work. However, off late, as the concept and strategies of technical analysis are being widely understood by audience, there has been growing acceptance of the fact that technical analysis does work. Lastly, the third and final myth is that the big investors do not use technical analysis at all. This myth could be beaten down by stating of the facts that big investors such as Paul Tudor James, Graham and Dodd have professed technical strategies that they adopted in the markets. More recently, some technical funds and ETFs have also come forward to prove that technical analysis is certainly a tool for them.

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