Is there any use in the technical aspect of trading, and what can it bring us? Technical analysis - your trading navigator, but not a crystal ball! The usefulness of technical aspects has always been a controversial topic - the technical indicators and K-line patterns used often make people love and hate them, sometimes feeling incredibly effective, and sometimes seeming completely ineffective! Today we will examine the value and limitations of technical analysis and see if we should value and learn from it. 1、 What can technology do for us? (Benefit) 1. Provide entry/exit signals: This is its most direct function. Golden cross, death cross, breaking resistance, falling below support, specific K-line combinations (such as rising stars, yellow stars) These are all trying to tell you that it is "possible" to rise or "possible" to fall, and provide specific operating point references. 2. Measuring market sentiment and strength: trading volume, RSI (Relative Strength Index), MACD bar charts, etc., can help you perceive whether the market is greedy or fearful, whether buyers are dominant or sellers are strong. This helps to assess the "health level" of the current trend. 3. Identify trends and patterns: moving averages, trend lines, channels, various forms (head, shoulder, top/bottom, triangles, etc.), the core goal is to help you determine what state the market is currently in (up, down, consolidation), and the possibility of this state continuing or reversing in the future. 4. Establish trading discipline and system: One of the greatest values of technical analysis is to free you from trading purely based on intuition. It provides a set of (relatively) objective standards to establish rules: when to buy? How much do you want to buy? Where to stop loss? Where to take profits? This greatly enhances the discipline and repeatability of transactions. 5. Manage risk and position: By using support levels, resistance levels, and volatility indicators (such as ATR), you can scientifically set stop loss levels, evaluate potential risk return ratios, and decide how much capital to invest, which is the key to long-term survival. 2、 Where are the technical limitations? (Disadvantage) 1. 'Lag' is an inherent flaw: technical indicators are almost always calculated based on past prices and trading volumes. They reflect what has already happened and speculate about the future based on it. When the market suddenly turns due to unexpected events such as policies, black swans, and large investors smashing the market, technical indicators often do not have time to react. 2. The double-edged sword of "self fulfilling prophecy": When enough people believe in the same technical signal (such as a key resistance level) and act accordingly, this signal may actually come into play. But on the other hand, if large funds deliberately "draw lines" to create fake breakthroughs/drops to "harvest" retail investors who believe in technology, it will fail or even become a trap. 3. The norm of "sometimes agile and sometimes ineffective": No technical form or indicator is 100% accurate. A success rate of 60% -70% is already considered very good. Market noise, random fluctuations, and the aforementioned 'anti technical operations' can all lead to signal failure. The historical graphics you see are perfect, but it doesn't necessarily mean they will be copied next time. 4. Unpredictable fundamental changes: project thunderstorms, industry policy changes, macroeconomic crises, project parties fleeing These fundamental driving factors are almost impossible to predict in advance from a technical perspective. A perfect bullish pattern may be instantly destroyed by a bearish news. 5. Overreliance leads to "seeing only the trees but not the forest": Indulging in complex indicator combinations and micro K-line patterns may make you overlook larger trends, overall market conditions (bull/bear), and truly important fundamental logic. 6. 'History may repeat itself, but it will not simply repeat itself': The psychological patterns of market participants have similarities, so certain forms may repeatedly appear. But the background (funding, policy, market structure) is different every time, and it is easy to suffer losses by carving a boat and seeking a sword. 3、 Should we pay attention to and learn about technical aspects? The answer is: it must be valued and worth learning, but it must be placed in the right position! 1. The technical aspect is an important "tool", not a "holy grail": treat it as a weapon in your trading toolbox, such as a navigation device or weather forecast. It can provide valuable reference to tell you "how is the road condition" and "what is the weather trend", but it cannot guarantee that you will never get lost or encounter sudden rainstorm. Don't expect to become rich overnight or predict all fluctuations with it. 2. Learning is necessary: In a market full of games, it is crucial to understand the "language" and "weapons" used by mainstream participants (a large number of retail investors and institutions are also using technical analysis). Not understanding the technical aspect is like not knowing how to read maps and listen to gunshots on the battlefield. The key lies in 'how to use': Combined use: Never rely on technical aspects in isolation! It is necessary to combine the understanding of fundamentals (value logic, industry prospects, project strengths and weaknesses) and market sentiment/funding (overall greed or panic? Where is incremental funding?). Combining the three, the winning rate is higher. Probability thinking: There is a failure rate when receiving technical signals. Successful traders rely on long-term adherence to a system with positive expectations (earning more when profitable and losing less when losing), rather than pursuing a single victory. Emphasize risk management: One of the most important technical applications is to help you set clear stop loss points and manage position sizes. This is the cornerstone for your long-term survival in the market. Simplify complexity: There is no need to pursue mastery of all indicators. Mastering several core indicators (such as trend lines, key support resistance, trading volume, 1-2 oscillation indicators such as RSI/MACD, 1-2 candlestick combinations) and understanding the market psychology behind them is more effective than swallowing a bunch of indicators. Focus on 'momentum' over 'form': Large trend directions are often more reliable than micro, short-term technical signals. Going with the flow is the core. To summarize: Is the technical aspect useful? Useful! It can provide signals, identify trends, measure emotions, establish rules, and manage risks, making it an essential skill package for traders. Is technology omnipotent? never! It has lag, can be manipulated, fails, and cannot predict fundamental changes. Superstition in technology is equivalent to gambling. Do you want to learn? Must learn! It is the universal language of market games and a key tool for building trading systems and managing risks. How to use it? Rational use! Combining fundamentals with market sentiment, maintaining probabilistic thinking, implementing strict risk management, simplifying complexity, and following the trend. To use it as a navigation aid, one must firmly grasp the steering wheel, brakes, and throttle (for fund management and strategy) on their own. The value of technical analysis lies in providing a framework for observing the market, developing plans, and enforcing discipline. It cannot guarantee that you will make money, but it can help disciplined and risk managed traders to pursue the possibility of long-term profits more systematically and rationally. I hope these can help everyone have a clearer understanding of the technical aspect! Bitcoin Binance okx