Is "Technical analysis of contract trading a dead end" your belief?❓

Technical analysis of contract trading is not a dead end, but rather an auxiliary tool that requires rational understanding. Many traders mistakenly believe it can predict everything; in reality, its value lies in providing structured trading standards rather than guaranteeing profits. Below, we analyze around three core points for users.

1. Technical analysis is just a tool

The essence of technical analysis is to identify patterns through historical data (such as price and volume) to assist in predicting future trends, but it is definitely not the core of trading. It includes tools like support and resistance levels, chart patterns, or moving averages, but these are merely the foundation for establishing entry and exit rules. The key to trading profitability lies in capital management and risk control, not in the technical indicators themselves; any indicator can fail because market fluctuations are uncertain. Therefore, it is more reasonable to view it as part of a "toolbox"—having standards is sufficient, there is no need to pursue perfect optimization.

2. Cognitive traps of technical analysis, common traps include:

1. Overreliance on a single indicator: such as blindly adding multiple indicators in an attempt to predict market conditions while ignoring market uncertainty, leading to frequent failures and losses.

2. Ignoring stop-loss discipline: hesitating to stop losses when going against the trend may amplify losses; technical signals are not absolutely correct and should be combined with personal risk tolerance to set stop-loss points.

3. Misjudging market phases: for example, forcibly using trend-following methods in a volatile market, or ignoring (such as the changes in bullish and bearish forces at key points), resulting in operational errors.

These traps stem from mythologizing technical analysis as a "holy grail" while failing to recognize its limitations.

3. The wisdom evolution of technical analysis

1. Follow the trend: identify market phases (trend, volatility, or emotional surge) and switch corresponding strategies. For instance, use moving averages to track in a trend, buy low and sell high in a volatile market, avoiding counter-trend operations.

2. Strengthen execution: strictly adhere to stop-loss and take-profit rules (such as "cut losses, let profits run"), reducing arbitrary trading.

3. Capital synergy cognition: focus on key point levels (such as support and resistance levels) in capital battles, and judge turning points based on changes in trading volume, rather than mechanically following indicators.$BTC