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birb_cromble  6d ago (text post)   844 thread views

Weekly Finance Thread - 2026-07-25

A weekly thread to discuss financial matters - from personal all the way up to global.

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Have any of you started learning how to interpret charts? (Alternatively, how many of you have been studying charts for a long time already?)

I've advised people here to obtain basic technical analysis knowledge a few times by now, but I suspect that piece of advice has been ignored.

Depends upon which type of Efficient Market hypothesis you believe in:

  1. If you believe in Weak form EMH (all past information is there in the current price), then Technical Analysis is useless.
  2. If you believe in Semi-Strong EMH (all past and current public information is in the current price), then Fundamental Analysis is useless. But insider information (private information) is helpful in making profits, although it is illegal.
  3. If you believe in Strong form EMH (all past, current public and private information is there in the current price), then all analysis is useless.

If you are a practitioner, then you should be able to point out where it can really give an edge to a retail investor/trader (or please link to where you have already done so).

No, it does not depend on EMH or any belief in any form of it. No one cares about that model.

Practitioner? In the sense that I realize that operating without charts is like driving cross-country without availing myself of any maps. Or like a doctor not using EEGs or any imaging techniques etc.

Do point how it will help in which area? Where do you drive cross-country in the world of investing/trading?

It's a bit frustrating to have to answer to overly literal quibbling when the necessity and usefulness of charts should be completely obvious to anyone who is doing anything beyond passive index investing. If you are someone who just lump sums/dollar cost averages into a fund, well keep doing that, it's an entirely legit strategy for those who want guaranteed 'okay' results over a long timeframe without spending any time or effort on learning. In that case you don't really need a thread like this and you don't need to discuss whether charts are useful.

Interpreting a chart will help you decide what to buy, when to buy, and when to sell. To state the obvious, these decisions are extremely relevant to how much profit you realize, and how much a market/sector/stock downturn affects you. And these decisions are hard to do well. Thus we see the point of learning how to get better at it and reduce trading errors.

Edit: typo.

Sorry if my comments have felt unknowledgeable. I am not here to prove / disprove for or against technical analysis. I am genuinely asking you to show someone (me) who doesn't know technical analysis, and who doesn't feel the need to either. Their necessity and usefulness is not obvious to me.

Sometimes, a good example can go a long way in making someone understand the use of something. It demonstrates the practicality directly. Empirically.
like you said, just lump sums / dollar cost averages into a fund will give "okay" results. <-- that is an empirically practical system.
where is such an ELI5/ELI10 explanation for Technical Analysis.

My, current, assessment is that putting effort into learning technical analysis will not have any additional benefit to my investing returns. And I am ready to change that view, if you can point me towards a reasonable explanation.

I don't know of any ELI5 or youtube videos explaining it, beyond the facts I've already stated: reading a chart will help you decide what to buy, when to buy it, and when to sell it. This is not debatable.

It's mainly about pattern recognition. Human nature doesn't change. Greed, envy, fear, doesn't change. Nor does supply and demand imbalances. Thus, patterns that played out 50 or 100 years ago will play out in very similar fashion now.

Are you willing to read a book?

Are you willing to read a book?
sure.

Start with this one.

Study it carefully, as you would any high quality textbook. It's the most important book, and it also happens to be quite beginner friendly.

Let me know in a post or private message when you are done, and I'll be happy to guide you further. :)

My, current, assessment is that putting effort into learning technical analysis will not have any additional benefit to my investing returns.

Not only the lack of additional benefit, giving technical analysis a go would actually likely detract from your investment returns.

Stick to the gender posting, you're much more well-read in that subject.

Telling people NOT to understand charts is insane, and harmful to newcomers.

You might be surprised what others are well-read about—and/or experienced in—beyond the fun or "fun" topics like gender.

And the mainstream, majority modern view among the well-read/experienced, such as financial academics, investment professionals, and genre-savvy amateur long-term investors, is that chartistry does not reliably outperform the market (although it can reliably underperform the market due to transaction and opportunity costs, loss of diversification if trading individual stocks), although some amateur retail traders with delusions of grandeur and a minority holdout of investment professionals may disagree.

Such as outlined by @reo above, it's not a coincidence that technical analysis is regarded the weakest of the three information types between technical analysis, fundamental analysis, and insider knowledge, where the majority view among academics is that fundamental analysis cannot reliably generate outperformance over the market (much less technical analysis).

People can understand charts all right; I imagine most Mottizens have been able to read line graphs since before they hit puberty, so no need for advice there. Telling people to use charts as tea leaves to make investment decisions, however, would better fit the description of "insane" and "harmful." Don't be salty that most of the well-read don't share your belief in male astrology.

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