Published on 21 March 2017
acting-man.com / Keith Weiner / March 20, 2017
Probabilistic Technical Analysis vs. the Mechanics of Arbitrage
We talk about the supply and demand fundamentals every week. We were surprised to see an article about us this week. The writer thought that our technical analysis cannot see what is going on in the market. We don’t want to fight with people, we prefer to focus on ideas. So let us compare and contrast ordinary technical analysis with what Monetary Metals does.
Technical analysis, in all of its forms, uses past price movements to predict future price movements. In some cases (e.g. momentum analysis) it calculates an intermediate signal from the price signal (momentum is the first derivative of price). But no matter the style, one analyzes price history to guess what the next price move will be.
This is necessarily probabilistic. There is no way to know that a particular price move will follow the chart pattern you see on the screen. There is no certainty. And when it does work, it is often due to self-fulfilling expectations. Since all traders have access to the same charts, and the same chart-reading theories, they can buy or sell en masse when chart signals them to do so.
We are not here to argue for or against technical analysis. We simply want to say that it’s not what we are doing – not at all.
The post Technical vs. Fundamental Analysis – Precious Metals Supply and Demand appeared first on Silver For The People.
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