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Technical Analysis Illusion

Technical Analysis is the study of charts of price and volume action to predict future prices.

But there is an illusion to this.

You can look at a chart with a 20-day moving average that implies you would have made money following this strategy.

But, when you analyze the data the profits can quickly fade.

Reasons:
  • Drawdowns
  • Trading costs
  • Volume issues
  • Trading Mistakes
  • Fear of strategy failure
  • Man in the moon phenomena


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