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My Journey from Technical Analysis Skepticism to Understanding

· 3 min read
Arif Yuliannur
Arif Yuliannur
Kelor Founder

I used to be deeply skeptical of technical analysis for various reasons. While I'm still not a true believer, I've come to understand it for what it really is—and that shift in perspective has been valuable.

In this article, I'll explore the sources of my skepticism and what changed my mind.

The Vague Prediction Problem​

First, most technical analysis predictions sound like this: "This asset is nearly at a breakout—it could either go up or down."

That's my core problem. If you're not telling me the direction, what value does the analysis provide? At any given time, price can go up or down. The prediction essentially tells us nothing we didn't already know.

The Zero-Sum Game Reality​

Second, market size is limited, and day trading is fundamentally a zero-sum game. There's no bulletproof strategy that scales indefinitely. Here's why:

  • You make trading decisions based on patterns in the market
  • By constantly reacting to these patterns, you create new patterns
  • Other traders detect and exploit your patterns
  • Eventually, all profitable signals become saturated

This creates a continuous arms race where any edge is temporary.

The Incentive Problem​

There's also the classic skepticism: if someone truly knows a secret trading formula, why would they teach it? The obvious answer is that selling books and courses is their real business model, not trading.

The Broker Propaganda Theory​

Another business-related concern is the suspicion that technical analysis hype is propaganda from brokers and trading platforms. Consider this:

  • History shows that the truly wealthy from stock trading got rich by buying early and holding
  • Very few became super-rich through day trading alone
  • If everyone just bought and held, trading platforms would lose revenue
  • Platforms only profit when people buy and sell frequently
  • This makes day trading extremely profitable—for the broker, not necessarily the trader

The Other Side of the Story​

But there's nuance here. Simply buying and holding only works if you hold the right asset. And picking the right asset to hold for decades? That's a huge gamble.

This is where my perspective shifted.

What Technical Analysis Actually Is​

Smart trading isn't about prediction—it's about managing risk and opportunity.

By understanding the likelihood of various outcomes, you can make informed decisions about whether to take a risk or pass. Technical analysis provides a framework for:

  • Quantifying probabilities rather than making binary predictions
  • Setting clear entry and exit points
  • Managing position sizes based on risk
  • Removing emotion from trading decisions

The more we remove emotion from the equation, the better our trading becomes. Technical analysis, when used properly, is a tool for systematic decision-making—not fortune telling.

That's the understanding I've gained, and it's made all the difference.