[gearhart]

The guide opens with an analogy suggesting that picking the best stocks to invest in is equivalent to picking the best restaurant to eat at, and that technical analysis is equivalent to looking for the stall with the most people at it.

If technical analysis is equivalent to looking for the restaurant with the most people at it, then the restaurant that you're trying to find is the one that, over the period that you intend to eat there, will gain the most new customers, relative to the number of customers it had when you walked in, not the one that's best to eat at.

The flawed analogy exactly explains the problem with technical analysis.

[pmelendez]

> "If technical analysis is equivalent to looking for the restaurant with the most people at it, then the restaurant that you're trying to find is the one that, over the period that you intend to eat there, will gain the most new customers,"

Which pretty much is what you want to achieve in certain markets.

For instance, if you are trading with CFDs and want to close your positions in the short term, you want to predict the right direction in an instrument with high volatility, which tends to be correlated with the amount of people trading in the same instrument (restaurant with the most people for a given period of time)