Criticism Of Technical Analysis
August 8th, 2010
Don’t be shocked to see them question the validity of the discipline to the point where they mock its supporters. In fact, technical analysis has only lately begun to enjoy some mainstream credibility. While most day trading training analysts on Wall Street focus on the basic side, just about any major brokerage now spends technical analysts as well.
Much of the criticism of technical analysis has its roots in academic theory – particularly the efficient market hypothesis (EMH). This theory says that the market’s price is always the correct one – any past trading data is already reflected in the price of the stock and, therefore, any analysis to get undervalued securities is useless.
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