Friday, 6 May 2016

Why FA Investors Like You And Me Should Learn TA

Publish date: Fri, 6 May 2016, 03:12 PM 

1. Hungry For Information

Last night 11.41 pm I published the article about MACD. By 9.30 am today, the article achieved more than 3,500 hits. I was pleasantly surprised by the high readership. Many forum members know me for my Fundamental Analysis. The fact that they bother to read my TA article shows that they are hungry for information about this field. 

I am encouraged by the favorable response. It motivated me to write more.

2. How I Write My TA Articles

When come to FA, ideas and information flow naturally for me. I have been punting based on FA since day one. So there is plenty of things for me to write about. 

How about TA ? Icon8888 is not a TA expert, where does he get the information from ? Can his information be trusted ? Are the information and concepts correct ?

This is actually my second attempt to write about TA. I have written a few articles at the beginning of 2016. I did it by copy and paste relevant sections from Investopedia website, highlight them by underlines and made some comments on the material. However, very soon, I lost interest and stopped writing. I am not comfortable just copy and paste information without processing or adding value. That format is too unsophisticated. It wastes my readers' time. I better stop writing before people grow bored of me.

This round I used a different method. I don't write an article until I am familiar with the topic. No more half baked potatoes. Full meals will be served.

In order to do that, I learned the various TA topics through a combination of the followings :-
(a) read aticles (mostly from Investopedia website);
(b) watch Youtube; and
(c) study chart samples (through Google Image).

On average, I should be able to have a pretty good grasp of the topic once I went through approxmiately 10 articles, Youtube videos and charts each. The information obtained therefrom might not turn me into an expert, but it is usually sufficient to cover the bulk of the issues, providing me wtih plenty to write about.

3. What Should We Aim For ?

Not everybody is enthusiastic about my quest for TA knowledge. One forum member commented that TA is nothing more than fanciful tool. Since I am new to TA, I was not able to counter his statement convincingly (even though my gut feeling tells me that he is very likely wrong). However, as I studied Relative Strength Index (RSI) recently, one unexpected benefit shows up - familiarity with TA will allow you to differtentiate whether somebody is bluffing you (BS you, if you don't want to mince words).

Previously, when somebody says that "this stock's RSI shows that it is now in Overbought Position, it is time to sell", there is nothing a TA illiterate like me can do. I can only keep quiet (and probably sell off the shares, if I have weak heart). But now that I have a better understanding of RSI, I know that he is only telling 50% of the story. According to what I have learned, a stock can be Overbought for a long time without going into trend reversal, you need to wait for change in momentum (MACD as indicator) before you press the Sell button.

In my opinion, that is the most important benefit of knowing TA - we are no more kindergarten kids being pushed around, we are now in a position to ask the right questions. 

We need not be so skillful until we can use TA to identify trends or generate Buy / Sell signals (there is no harm also, if you can achieve that ultimately). However, we should know enough to be able to question, digest and absorb what TA experts tell us.

The analogy to learning a new language is this :-

We don't necessarily need to know how to write, but at least we need to know how to read with the new language.

That is the most basic thing we should aim for at this stage of our learning cycle.


  1. Hi Icon, thanks very much for ur contribution these few years.
    im really appreciated that to be one of ur fan here.
    ur articles reli useful and meaningful. well done!!


    sister site.