In a wide sense, at that topographic point are 2 forms of knowing:
* Predicting - Being able to anticipate hereafter events;
* Understanding - Being able to explicate events.
We tin predict without understanding. We know to anticipate changes inward weather condition without beingness able to explicate the chain of events past times which these occur.
We tin sympathise without beingness able to brand specific predictions. We mightiness sympathise reasons for a market's demeanour without beingness able to predict when together with how the marketplace volition move.
This is a chip of a simplification, but a skillful bargain of what nosotros telephone telephone technical analysis seeks prediction. Influenza A virus subtype H5N1 skillful sum of primal analysis seeks understanding.
The vulnerability of much technical analysis is that it finds patterns that seem to endure correlated amongst toll changes, but cannot explicate the nature of that relationship. As the video explains, if nosotros hold off at plenty patterns, nosotros tin uncovering something that appears to endure predictive. Indeed, amongst a large plenty search infinite (thanks to powerful computing), nosotros tin uncovering things that operate inward sample together with out of sample that nonetheless are random!
The regulation that makes sense hither is that nosotros don't *truly* accept an border unless nosotros tin clearly explicate why this border is present. Prediction without agreement is a delicate solid soil for risking our hard-earned money.
If nosotros tin explicate the solid soil for a predictive relationship, nosotros own truthful understanding. Real conviction together with confidence inward trading comes from agreement the solid soil for what you're doing.
A somebody amongst a role inward life has a "why"--a considered laid upwards of reasons for doing what they're doing. That somebody is most probable to move inward a coherent direction. Without a "why", nosotros wander through life. That's the divergence betwixt having a twelvemonth of sense versus i solar daytime of sense repeated 365 times.
So, too, amongst trading.
Trading psychology is much easier when nosotros accept a genuine "why" underlying our actions. Too many people are pursuing trading because they can't figure out about other agency to operate independently together with brand plenty coin to back upwards themselves. This is understandable, but invariably ends badly. People setting themselves upwards every bit gurus are all likewise willing to exploit the wish to brand a living from trading. A slap-up interrogation to enquire near whatever stance advanced past times a guru is, "Why?" If you--and they--can't genuinely explicate why an stance works, how exercise yous know yous really accept an border together with non merely about other designing jibe to marketplace data?
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