Making Money Using Charts?

I never have, but I have never put much emphasis on it or really looked into using it seriously. Reading charts, otherwise known as Technical Analysis, is the study of price movement and trend in markets in order to forecast future prices (from Wikipedia).

I have tried to get into it a few times over the years but it never seems to stick with me. I think the biggest problem I have with it is the sheer complexity that is inherent in understanding the concepts of technical analysis. I consider myself a pretty smart guy, but when I have to read and understand something that uses terms like Stochastic oscillator, Parabolic SAR, and Hikkake Patterns, I gloss over and end up delving back into my fundamental analysis.

I think my main problem with technical analysis is that it ignores the fundamentals and tries to predict the future based on trends and historical patterns. I guess my thought is that all the trends and historical price action is not going to matter if the fundamentals are poor or a company misses an earnings target. I am not saying that fundamental analysis will definitely uncover these situations, but at least the decisions are being based on more that what a chart is telling you.

Perhaps there is a way to combine fundamental analysis with technical analysis – I imagine many investors do this. However, I have to agree with Peter Lynch when he said, “Charts are great for predicting the past”.