Breaking Down 5 Technical Analysis Myths: Let’s Get the Facts Straight!

Commodity Samachar
5 min readOct 5, 2023

The world of trading is unique, however it has a lot of facets to first consider. Similar to several planets orbiting the sun, the stock market has several concepts in the form of practices that revolve around it.

One of the most misinformed or misunderstood of the practices could be considered a technical analysis.

In several situations, traders and investors outrightly denounce technical analysis as somewhat of a superficial study of charts and patterns without any concrete, conclusive or profitable results.

Others believe that it’s an ‘Astra’ ,once ‘mastered’ could potentially bring sizable profits towards you.

With opposing views, there is misinformation within the sphere. In many cases, people call trading or analysis ‘gambling’ and do not consider it a complete science.

However, what is technical analysis?

Technical Analysis:

Putting it simply, technical analysis is a trading discipline that’s used to evaluate investments and identify specific trading opportunities by analysing statistical trends from trading activity, price movement and volume to ascertain the direction through which a certain stock or commodity may move.

Technical analysis tries to capture market psychology and sentiment by analysing price trends and chart patterns for potential trading opportunities.

Contrary to traditional beliefs or the practice of fundamental analysis (which we are big fans of :D !!), technical analysis does not necessarily care much about the companies behind the mask, or their profitability.

Basically, it’s like someone who understands technical analysis does not want to know what Bruce Wayne A.K.A Batman does at night but would only look at the trajectory of Wayne’s enterprise stock!!

(We thought we’d tell you a comic joke before we get into the debunking :D)

Moving on to the topic ‘at hand’ there are several misconceptions surrounding technical analysis, so let’s debunk these one by one.

Without further adieu, let’s get started!!

Debunking Technical Analysis Myths — One at a Time:

1. Only Short term traders or day traders use technical analysis:

The most common misconception that exists is that only a certain category of people use this practice or it’s to be used in specific situations only. That’s completely wrong!!

It’s a common myth that technical analysis is only appropriate for short-term and computer-driven trading like day trading or high-frequency trading.

FYI, technical analysis existed before the use of computers, and some of the pioneers in technical analysis were long-term investors and traders, not day traders.

Technical analysis is used by traders on all time frames and through every chart. At Commodity Samachar, our whole team keeps the sole focus on the charts and the trajectory that stocks take when it comes to technical analysis.

2. Technical Analysis has low success rate:

Technical analysis can’t just be summarized into an activity but rather a way of life. There are several things to consider like observing things, keeping focus and also several concepts involving chart patterns which lead to more accuracy.

Yes, it can’t be considered 100% accurate, but the most skilled technical analysts can get accuracy between 70 -80% in the market.

When we take a look at a list of successful market trades, having a multi-decade of profitable trading experience, this myth will be automatically debunked.

For example, Market Wizards: Interviews with Top Traders (Wiley, 2012) by Jack D. Schwalger features interviews with many professionals who have profited solely by using technical analysis.

3. A Quick & Easy Hack to make money:

In a world where YouTube videos and articles lead you to believe that you can make money from INR 100 to Lakhs, it’s easy to get misguided beliefs.

The internet is full of technical analysis courses promising trading success. However, technical analysis alone won’t be the skill in your arsenal required to make a consistent profit in the market.

Continuous success in trading requires in-depth learning, practice, good money management and discipline. It requires technical knowledge, dedicated time, knowledge and attention as well. In situations like that market experts like Commodity Samachar can provide the certain dedication to bring you profits. As you relax or go about your day, we’ll take care of business as usual in the stock market and commodity markets.

4. Technical Analysis software equals easy money:

The internet and the inclusion of AI is a boon for our society, but it brings with it ridiculous ads promising that it will do the ‘analysis for you’. Technical analysis software provides insights into trends and patterns, but doesn’t necessarily guarantee profits. It’s up to the trader to correctly interpret trends and data.

5. Technical Analysis is the same for all markets:

Just like every vehicle has some different kind of power sources like petrol, diesel or electricity, the technical analysis for equities, futures, options, commodities, and bonds are all different. Each market has different requirements.

There may be time-dependent patterns like high volatility in futures and options nearing expiry or seasonal patterns in commodities. It’s best not to make a mistake by applying the wrong technical indicators, but get in touch with experts like Commodity Samachar as we’ll be perfect guides to direct you through the stock markets and commodity markets too.

A Final Note:

Technical analysis is an ally, but not the complete solution. The stock markets and commodity markets are like tornadoes or storms, which can only be maneuvered through by successful traders. However, knowing the technical can help you travel through it effortlessly.

It might not guarantee instant profits or 100% accuracy, but with patience and mastery, it’s a tool that will get you the profits you desire.

Commodity Samachar
Learn and Trade with Ease

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Commodity Samachar

Technical Analysis| Commodity Trade | Sebi Registered Financial Analyst Firm | Equity Outlook | Trade Advisory