I think it's important to give credit where credit is due. You...

I think it's important to give credit where credit is due. You articulate very clearly the role of technical analysis in pursuit of higher returns in active investing/trading of certain financial instruments. I can go to any physical (antiques/collectibles/clearence sales) auction and I could chart the bids/ask as the auction proceeds and the pattern that emerges would be similiar over and over again, no matter the place or the time of that auction. You are observing people's behaviour and that is what charting does.

The only extra point, I would add, is that for small investors/traders, relevent to the big funds/money managers, is that it is the small size of of their trade that gives us the edge. it allows for nimbleness that the big funds can't match.


from Mark Minervini..............

Individuals, in contrast, can react to surprises that create new price trends almost instantly. There is no committee approval process and no diversification mandate. With today’s technology, most traders—professional and individual alike—have nearly identical tools at their disposal.

However, individual traders have a tremendous advantage over professionals mainly because they have greater liquidity and speed, enabling them to be more concentrated in a small list of well-selected names at even lower risk because an individual can utilize stop-loss protection with little or no slippage. An individual, with a faster response time, can be more patient and strike at only the most opportune moments, which is the best advantage of all.

Most big institutions would rather make what they regard as safe investments than pursue big capital gains. They will boast about success if the market is down 40 percent but their portfolio has lost only, say, 32 percent. That’s an example of what they claim is beating the market! If you think for a minute that the big institutional approach is safer or less risky, I suggest you take a look at your favorite mutual funds and study their performance during past major bear markets.

For a big fund manager, size impairs precision: the ability to enter and exit stock positions without affecting price in a counterproductive way. This technical disadvantage forces the manager to seek informational superiority. Although tactics and techniques play a role for virtually every investor, the individual can utilize a tactical approach with far greater efficiency and effectiveness than can the large institutional player.

The bottom line is that if you want mutual fund–like results, invest like a fund manager. If you want superperformance results, you must invest like a superperformance investor.