I would argue that they have to, for at least two reasons. First, it allows them to make intelligent decisions which they could not have been as smart if they only used other means of reasoning in other fields. Second, they can do so as much as they can do by using simple tools for analysis which they could not have done by using all manner of complex techniques. So, if you could learn all the technical analysis techniques by just being a professional trader, you’ve probably learned that much too.
Second, and this is one reason why I think they have to use technical analysis, it lets them do math on these charts. This is where the fun and the trade part begins.
Why the Technical Analysis
In his book, The Art of Trading, Ben Graham explained the concept of time-based trading. These charts tell you where risk might be at any given moment in time or risk. How they use time to find risk can be summarized as
a) to do a short-term chart to check risk. In this case, it would be to do a 30-second chart
b) to do the 1,000,000-second chart to find risk at every second. That’s the chart of risk
c) to do the 1,000,000-second chart and then return and check risk again.
The charts are not meant to be read in any particular order; rather, you can read them all in 1 second flat. I’m going to do a 1,000,000 second chart, but if you want a 1,000,000 minute one, the chart for that, too, is available.
Now, you can choose the order. The chart of interest here is the one at the top, because that’s the price that’s just above, or above, or just above risk:
If the current chart below is the same as the one at the top, it will lead you to an equal measure or greater than, or greater margin of risk. (See my article on risk and margin for a simple example.) If the current chart at the top is one of the 30-second charts below, that means it takes more than one second to find a single degree of risk.
By reading one chart at a time, and by understanding how to read technical analysis charts, you can find out what the time, risk, and degree of risk is (for this example) at any 1,000,000 second chart. It
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