Are Your Current Technical Analysis Indicators Slowly Destroying Your Portfolio?

This episode takes another in-depth look at technical analysis indicators to identify which ones work best and which ones you should avoid.
Are Your Current Technical Analysis Indicators Slowly Destroying Your Portfolio?
Kirk Du Plessis
Apr 17, 2017

It's been over a year since we released our game changing report on technical analysis indicators called SIGNALS, and since then I haven't talked more about how we are using technical analysis in conjunction with our options trading. So, I wanted to revisit this topic on the podcast today because I still see a lot of simple, easy to correct, mistakes being made by both new and experienced traders when it comes to ready signals generated from technical analysis.

Key Points from this Episode:

  • Technical analysis is a very small part of how we do options trading right now.
  • You do not need to use technicals to be successful as an options trader; however, it can enhance your ability to make decisions.
  • Technical analysis is often best used when you know you have to skew your position in one way or another.
  • Often times technical analysis is used incorrectly when traders believe the signals they get means that the stock is going to turn around and go the opposite direction.
  • The signal does not tell you when the stock will turn on a dime, which they rarely do.
  • When you get a technical signal it indicates that the pace at which the stock is moving is perhaps too fast in the particular direction.
  • The marriage of technical analysis and options trading strategies, with a margin of error, gives you the best trading advantage.

Notable Metrics from the Testing Report

  • 95% of technicals completely failed the benchmark index, and never performed a net return higher than the S&P.
  • The overall average win rate of technical analysis was 45%.
  • 208 technical analysis tests blew up model portfolios, creating losses of over 100% after commissions.

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