Why is the technical system effective?

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The logic of efficient market theory
Only within the defined framework, the logic of efficient market is quite convincing. The logic of efficient market implies the following assumptions: first, there are many rational investors in the market who carefully weigh the information from various sources and make transactions according to the information that can bring extraordinary returns; Second, for all investors, all information can be obtained and obtained at the same time. But the inference derived from this is that no investor can use new information to make profits, because no investor will be the first to obtain information and trade based on it than other investors. The final result will be that before anyone can make a deal and profit from it, the price has changed to the reasonable price level determined by the latest information.
Information in historical prices
According to the efficient market theory, since the historical price is the most easily available information and can be obtained by all investors at the same time, any information connotation in the historical price can be instantly reflected in the current price. Finally, it is concluded that the historical price does not contain any information about the securities price. This is the core of random walk theory - historical prices do not contain anything indicating the future price path.
This conclusion seems to be applicable to any technical system, and any technical system that uses historical prices to support transactions is meaningless. In fact, if a technical system or any other system is really effective and everyone flocks to it, the success of the system will become the reason for its failure. Therefore, it is its popularity that destroys its profitability.

Contradiction of efficient market theory
However, the efficient market theory itself provides the most powerful refutation to the above conclusion - "there are many rational investors in the market who carefully measure the information from various sources and make transactions based on the information that can bring extraordinary returns." Many investors are not satisfied with a method that can really bring profits, and a large number of historical trading data can not convince them that the extraordinary returns in the past are not obtained by luck. After all, no trading system can generate huge trading profits every time, and no system can completely avoid risks. Coupled with the imprecise science of measuring the causes of extraordinary returns, it is no wonder that skeptics miss out on the apparently profitable trading system.
Not only the efficient market theorists fall into the rut, but also the basic analytical investors who never want to look at the charts (no matter how well the chart experts next to them do), the chart experts who never want to look at the company's income statement, and of course the index funds managed by the efficient market school who doesn't rely on any information at all.
After all, investment behavior contains the factor of faith. Such is the composition of the market. Pious faith is not easy to shake, and skeptics will not be easily persuaded. Similarly, rational investors in the market will not use successful trading systems to fill the profit gap so soon. In this way, a profitable trading system can last forever.

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