Can one earn money in stock market by following technical analysis software?
I’m afraid you can’t. There is a lot of evidence and research that has proved that over the short-term that stock market prices follow what is known as a random walk. In other words you can’t look at what they did yesterday to know what they will do today. Over longer periods of time markets do move in patterns. The best evidence is that they are mean reverting, what this means is that stock marktes will spend time being overvalued or undervalued but in the long run will return to an average valuation. One way of measuring this is using the cyclically adjusted price earnings ratio devised by Yale Professor Robert Shiller. There are a lot of people out there wanting to sell systems aimed at beating the market, but in the truth is if their systems were so good they would be making money trading instead of trying to sell you software. The first question that you should always ask as an investor is; why do they want to sell this to me?
