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Eight Signs To Help You Identify Technical Analysis Trolls

Modern technology offers the opportunity to trolls to pose as technical analysts. How do you recognize a technical analysis troll? Eight signs provide clues.

Nowadays there are many technical analysis websites that offer free stock quotes, charts and analysis to the public.  Information from these valuable websites is included in social media messages constantly. Many of those who post the information are chart and technical analysis trolls.

Trolls do not use a platform, such as Bloomberg, NinjaTrader, Tradestation, Amibroker, etc. Real traders and expert analysts use a platform where they program their indicators and systems. When you see someone constantly posting charts saved from some website, for example StockCharts.com, then the probability of him being a troll is high.

More importantly, you can recognize a troll from a tendency of drawing lines and indicators on a large number of charts while making vague calls of direction, for example: “stock XYZ will go up if it moves first below or above this level, otherwise if it moves below that level it will go down.”

Many trolls look at websites such as finviz.com where there is an excellent compilation of daily statistics for stocks with large gain and loss and then post charts in social media claiming they are invested in that stock. Of course no one believes them after the fact. Claiming gains from stocks with large moves in hindsight is a sign of trolling.

Most trolls cannot concentrate on one market because this will expose their incompetence. They jump from market to market and from one asset to another. Most trolls never provide exact entry and exit levels in their analysis because they do not understand the importance and need of risk management, position sizing and capital limitations. There is a notorious troll in Twitter and StockTwits who constantly posts recommended stocks and at the end of the year compounds all the returns and thinks this is the return of a hypothetical account. What this troll does not understand is that risk and money management limits the number of stocks that can be held in an account so that returns are maximized and risk is minimized.

Trolls appear to love the 200-day moving average and simple but irrelevant statistics, such as the number of days between two large up or down moves or the number of up gaps in a given period. They think that presenting these irrelevant statistics makes them look like mathematically oriented quants.

Summary of how to recognize a technical analysis troll

  • Makes no use of trading platforms
  • Posts constantly publicly available information
  • Makes vague claims after drawing lines on charts
  • Claims of having predicted large moves in hindsight
  • Manually analyzes simultaneously many securities and assets
  • Appears to ignore risk and money management
  • Tries to cover incompetence by being cocky and aggressive
  • Constantly rants about irrelevant issues

The above should help in identifying technical analysis trolls.

Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

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