Do Any Of You Trade Using Fundamentals Intraday?

tommog · Mar 24, 2006

Hi,

I have always been a very technical trader but i think its easy to become narrow minded just looking at the charts. Its a fact that markets are dictated by fundamentals on a long term basis and when fundamentals have a big change technicals go out the window. Usually when i trade i miss out on the big moves because the fast price action seems too high risk. I have started trading at a prop firm and am pretty consistent technically but end up sitting on my hands when the really big moves start because we have very tight risk paramiters. However i was wondering if any intraday traders (perhapes any of you prop guys) take trades based on fundamentals intraday still being able to keep tight stops? This can be interpretted anyway, either watching relationships with other markets or in particular trading the news. This is a skill i have never mastered which i have found most good traders have as part of their arsenal

Cheers,

Tom

TWI · Mar 25, 2006

I think the most useful fundamentals are the ones that contradict the subsequent price action. A bearish figure often leads to a bull move and vice versa, these are the best ones to jump on. Ultimately however I feel short term fundamentals are distracting. The best market to trade is one where you have a long term fundamental story that is convincing and then just trade the market from one side using your technicals to time the entry.

SOCRATES · Mar 26, 2006

twalker said:
I think the most useful fundamentals are the ones that contradict the subsequent price action. A bearish figure often leads to a bull move and vice versa, these are the best ones to jump on. Ultimately however I feel short term fundamentals are distracting. The best market to trade is one where you have a long term fundamental story that is convincing and then just trade the market from one side using your technicals to time the entry.

Yes, very good advice, very wise.

tommog · Mar 26, 2006

thanks twalker that makes a lot of sense

Splitlink · Mar 26, 2006

twalker said:
I think the most useful fundamentals are the ones that contradict the subsequent price action. A bearish figure often leads to a bull move and vice versa, these are the best ones to jump on. Ultimately however I feel short term fundamentals are distracting. The best market to trade is one where you have a long term fundamental story that is convincing and then just trade the market from one side using your technicals to time the entry.

If you are saying that if the price rises on bad figures it is a good shorting situation, then I agree
with you. Who would buy a share with bad fundamentals?

On the other hand there are, often, companies that are unloved by the market that have plenty of
fundamental reasons for buying.

The fact that one is unsure of the time that the share will attract favourable attention is why fundamentals are not a good investment tool, in themselves, for short term trading.

Now, buy a share that the chart tells you is going to rise and that has the benefit of good figures,
be it value or growth, and you could have a good position trading situation. I don't do that because I only trade FT100 shares with a spreadbetting company. These are, usually, stocks with plenty of demand every day. The shares I own are smallcaps that I find are slower to move, unsuitable for, even, six months trading purposes, although one lives in hopes.!

Split

timsk · Mar 26, 2006

Splitlink said:
If you are saying that if the price rises on bad figures it is a good shorting situation, then I agree
with you. Who would buy a share with bad fundamentals?

Hi Split,
If I've understood twalker correctly, then you've misunderstood him, or the other way around!

If the share price rises on bad figures, this is a very bullish signal because the market is in effect, saying 'we love this Co. in spite of its poor figures'. The news is bad but the reaction to it is positive. It's the reaction to the news that is all important to traders and not the (fundamental) news itself. It embodies the adage, 'trade what you see and not what you think'. So, it's a potential buying opportunity - not a shorting one as you suggest. The reverse is also true. Earnings figures or a news release that are very strong, can cause the price to fall dramatically for whatever reason. The 'why' in all of this is irrelevant to traders - let the LTBH investors worry about that! Therefore, this is a potential shorting opportunity for the same reasons.
Tim.

Splitlink · Mar 26, 2006

timsk said:
Hi Split,
If I've understood twalker correctly, then you've misunderstood him, or the other way around!

If the share price rises on bad figures, this is a very bullish signal because the market is in effect, saying 'we love this Co. in spite of its poor figures'. The news is bad but the reaction to it is positive. It's the reaction to the news that is all important to traders and not the (fundamental) news itself. It embodies the adage, 'trade what you see and not what you think'. So, it's a potential buying opportunity - not a shorting one as you suggest. The reverse is also true. Earnings figures or a news release that are very strong, can cause the price to fall dramatically for whatever reason. The 'why' in all of this is irrelevant to traders - let the LTBH investors worry about that! Therefore, this is a potential shorting opportunity for the same reasons.
Tim.

I'm waiting for traders like that! I don't say that I am right all the time, but bad figures and poor prospects are to be shorted if they get ramped up. twalker is, probably, one of the skilled traders who can spot such a share and I give him full credit for being able to buy and sell at the correct times. My opinion is that the risk/reward factor is on the short side and I am unlikely to be a buyer because I do not consider myself to beskillful enough.

I am, mainly, a LTBH investor and I hope that all my shares have been bought when they were cheap and the fundies were good. Trading is a fun thing for me and I enjoy myself, but I like to get it right, just the same.

Split

Do Any Of You Trade Using Fundamentals Intraday?

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