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The Role of Subjectivity in Technical Analysis: Read about last week’s STA talk with Tim Parker MSTA

Tim Parker MSTA is a veteran in the field of technical analysis and this was evident in his talk.

Tim started the session by asking who in the room was optimistic about the state of the financial markets. Around 30% of the room said they were while 70% were more negative. He then asked the same question from a technical point of view and there was a stark difference in the number of raised hands. Technical analysts read charts and at the moment the S&P 500 is still trending so many of the hands that were negative earlier changed upon reflection.

In a slightly scientific talk, Tim spoke about the role that experience and cognitive bias plays on us as analysts. He said that it takes experience to know what feels “odd” as he put it. When the correlations and technical indicators are showing you something, but it just doesn’t feel right. Tim also alluded to the fact that nobody knows what will happen in the future and everyone in the market is making predictions and forecasts. He said, “you just need that slight edge, even 51% will do”.

“Scientists are objective and artists are subjective, and, in my view, they work best together” Tim Parker.

I completely get where Tim is coming from as on many occasions I have felt that price is holding levels when it really shouldn’t, but then the price just bursts higher. One point that resonated with me is the fact that Tim mentioned that subjectivity has a massive role in technical analysis. What could look good to one analyst may look crazy to another. That’s what makes us all different, his point was that is where experience counts.

In the Q&A portion of the evening, there was the inevitable question about AI and automation in trading. Tim said that he had it on good authority that machine learning was far away and the make-up of these algorithms is very similar to human thinking in any case. So he was not at all worried about the threat of the machines so to speak.

All in all, it was wonderful to hear from such an experienced analyst and to hear his thoughts on the current evolution of our industry.

Rajan Dhall MSTA

Posted in Finance, General, Markets, STA charts, STA education, Technical Analysis, Technical Analysis Courses

The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA. The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. None of the information on the STA’s blog constitutes investment advice.

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