I would like to address a small issue that I found to be rather disturbing. Recently, I was asked this question by a certain pedantic individual, "What is the formula to calculate MACD?" I replied by asking if it really mattered. This is the wonderful answer I got:
"Well if you don't know the formula then you're not a real trader!"
This statement sent my mind zooming back to my college days when my professor gave me a similar answer to my question,
"Why do we need to know how to derive the formula? Isn't it better to just use it to form a conclusion?" Obviously I was punished for arguing with a lecturer and "behaving like a rebel." Go figure!
I really don't want to generalize but these are the kind of people who think that, by knowing the technicality behind a certain topic, they are now a master of it. You've met these people before. You know, the ones who think that by getting a better grade they are now the smartest person in the class. These are also the ones who stick to the trivial "textbook" way of doing things and not adapting to change.
The way I see it, a person need only know how a particular process works. The technology or the tools that come along with it are just parts of the whole that will help you accomplish your tasks slightly faster and more efficiently. There really is no need for you to delve so deep into the tools that you end up forgetting the process. Just because you're proficient in a certain language and know the grammar flawlessly, doesn't mean that you can communicate effectively and get your work done. Communication is a skill that's totally different from learning a language. A skill which can be learnt of course. The same way, technical analysis is a skill that is essentially disparate from learning the formulas.
The only reason such questions are deemed critical is because that is the way kids are being taught in schools. The emphasis is mostly on following a set of protocols to arrive at the right answer. Students are not given the freedom to stray away from the prescribed method and think of some new way to solve the problem. They are forced to stick to the tried and tested method and and produce the same in an exam. This is also the method adopted by large corporations when they are hiring new candidates. They expect the candidate to give them the "correct" answer as mentioned in a "textbook". The fact that the employee may be able to learn new methods to fix a problem seems irrelevant. By doing so, the company on the whole, fails to adapt to change since the hired employees won't know how to and that marks the decline of it's long running success.
I may have gone off topic on a few occasions there but the point I'm trying to make is this: if one has the ability to learn, predict and adapt to change by concentrating on ways of finding answers using certain tools instead of concentrating only on knowing how the tool works, he/she will survive successfully in the long run.
That being said, I feel that this is what needs to be taught to students in schools and colleges instead of teaching what the industry requires of them. I know at least
one person who would agree with me on this.
