The Three Principles of Technical Analysis
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Series "Trading Philosophy" … 11
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The number "3" is used very conveniently.
Even the Buddha's face has three chances; what goes around comes around, a three-day habit, three years on a stone… even a dog says, "Three times and it's a Woof!"
There are market terms that use "3" as well, but…
"Three-step rise" and "three-step fall" seem more about mood and the phonetic feel of the number "3" than about the actual numbers.
What about the three principles of technical analysis often cited when looking at charts?
- Prices discount everything (all material is instantly discounted)
- Prices form trends
- History repeats itself
"1" is based on the premise that the market is efficient.
But if the market is efficient, wouldn't trends not occur… such questions arise.
Thinking practically,
When looking at charts, accept price movements as a “factual reality”
However, because it is not efficient, trends persist
Is that the answer?
In the end, no one knows tomorrow's price, so while saying "it's not free for all" would be a misstatement, we operate under a “personal way of thinking” and assume “stock prices will move in a certain way,” and move positions accordingly.
By the way, there are conclusions such as "the market is extremely efficient," "you can't beat the average even with technical tools," and "trading markets aren’t for everyone," which are correct for those who advocate them, but for us who actively trade, these are mistakes—yet for those who argue them, they are their own "correct" and "truth."
From now on, as much as we can think of, we will introduce various philosophies.
