Traders focus on technical analysis. And why wouldn't they? Who doesn't want their charts to look "professional", with brightly colored indicators and crisp, clean trend lines to convey the idea that they are professional traders who understand what trading is all about. After all, the best chart analysis produces the best results, right? Wrong. If you use logic you will quickly discover that technical analysis does not help you predict price movement reliably.
Technical analysis in all it's various forms is a way to quantify and measure historical price movement in your charts. It is 100% accurate in hindsight. It is not as accurate at the hard right edge of your chart where your risk lies.
When you measure a 300 point move, in the back of your mind you're thinking to yourself that somehow you should have known about that move ahead of time. That you should be able to accurately and consistently predict the future. That is what traders are attempting to do by using technical analysis on lower time frames with tiny stop losses to control their risk exposure. They think someone somewhere knew that that 300 point move was coming and they bagged that profit in their account. The truth is that no one anywhere knew with certainty that the price was going 300 points and bagged the whole thing. There may have been some small number of traders who took the trade in the right direction and decided to get out when the price moved substantially in their favor, so they got the lion's share of that move. That is a function of proper execution as much as anything else. Once they took that trade 300 points away those traders had to sit back like everyone else and watch price action play out. They gave up control once the mouse was clicked and the order was placed and executed. If they knew with certainty that the price was going 300 points their way they would have bet the farm and made a killing. When you take a trade in an uncertain environment you have to limit your risk or face a huge potential draw down in your account, which you may not be able to recover from. Trading with a small percentage of your account helps to limit your risk to a manageable level so you remain in the game even after a string of losses. Bet the farm on any one trade and your account may be in jeopardy.
Technical analysis helps you analyze price movement and aids you in deciding when and where to initiate a trade based upon your own unique trading system. By using techncial analysis in isolation you are missing other information which is important to your analysis. As price moves there are retracements, range activity, breakouts, false breakouts, stop runs, whipsaws, etc. These all take time to play out as a move matures on all time frames and they add to the uncertainty. There is no way to know at what exact point or time they are coming. What you can do is to start your analysis on a longer time frame and then scale down to lower time frames keeping the prevailing order flow direction in perspective so when you get down to the time frame you use for taking an entry you have some idea of what is possibly going to happen next because of the longer time frame bias. Additionally you can wait until the momentum picks up before you enter the market so that your chances of price moving in your direction increases. If you enter the market when price is meandering up and down expect to be stopped out often as the big players gather orders on both sides of current price to build their position and get a better price as they use up the liquidity before they make their move to their next target.