Technical Analysis, Technical Analysis

See e.g. Kirkpatrick and Dahlquist Technical Analysis: The Complete Resource for Financial Market Technicians (Financial Times Press, 2006), page 3.

For example, any large brokerage, trading group, or financial institution will typically have both a technical analysis and fundamental analysis team.

Taylor, Mark P., and Helen Allen (1992). "The Use of Technical Analysis in the Foreign Exchange Market," Journal of International Money and Finance , 11(3), 304314.

Technical analysis holds that prices already reflect all such influences before investors are aware of them, hence the study of price action alone. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.

John W. Henry, Larry Hite, Ed Seykota, Richard Dennis, William Eckhardt, Victor Sperandeo, Michael Marcus and Paul Tudor Jones (some of the so-called Market Wizards in the popular book of the same name by Jack D. Schwager) have each amassed massive fortunes via the use of technical analysis and its concepts. George Lane, a technical analyst, coined one of the most popular phrases on Wall Street, "The trend is your friend!" Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do many hedge funds. A relatively recent trend, both in research and industrial practice, has been the development of increasingly sophisticated automated trading strategies. These often rely on underlying technical analysis principles (see algorithmic trading article for an overview).

In various studies, authors have claimed that neural networks used for generating trading signals given various technical and fundamental inputs have significantly outperformed buy-hold strategies as well as traditional linear technical analysis methods when combined with rule-based expert systems. R. Lawrence.

John J. Murphy, Technical Analysis of the Financial Markets (New York Institute of Finance, 1999).

Irwin, Scott H. and Park, Cheol-Ho. (2007). What Do We Know About the Profitability of Technical Analysis.

For example, Peter Lynch once commented, "Charts are great for predicting the past." Warren Buffett has said, "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer" and "If past history was all there was to the game, the richest people would be librarians." [6] An influential 1992 study by Brock et al. which appeared to find support for technical trading rules was tested for data snooping and other problems in 1999; while the sample covered by Brock et al was robust to data snooping.

Source: Wikipedia > Technical Analysis