Does it make sense to combine technical and fundamental analysis?

[patrick.b]

Hi,


glad to be part of this forum. Hope to contribute myself as time goes on.

I have traded in and out for some years but only recently touched the sides on 'investing'. I used to trade fx on and off but never had any luck with technical analysis. I always found that I'd be getting into low profitable setups through support and resistance and other means never really excelled in this manner.

In recent times I tried my hands with a different approach. I bought a CFD in Ethereum a while back and made some money through a fundamental approach, seeing what other people are saying about the asset, researching things myself etc; and for me this seemed like a transparent way of doing things. In recent times I have also bought Apple CFD along the same mental view, using my own knowledge of the brand and experience with the brand etc; (I use Apple so I feel like I know the brand well from a consumer point of view).

My way of investing or trading in both of these assets hasn't been from reading annual reports or price to earnings ratios but to use my own research of the product itself and my knowledge of the brand from a consumer point of view. I feel like I'm not the only person who has taken this approach. 'Invest in what you know'.

Now, the question here is that does it make sense to combine technical analysis along with fundamental analysis? So when I bought Ether or Apple I'd always buy on a dip or maybe an area of support etc; which of course is a technical viewpoint, however I wouldn't make my buying decision based on this, it would be based on my own views from news on the web etc; however using these technical entry points seems logical.

I'm just wondering whether this makes sense to combine the two like this and whether you do yourself.

 

[EnlightenedJoe]

Yes, it makes sense. No, it will produce no better result than what you can accomplish currently. Same will be true of all other clever ideas you are yet to come up with.

Walmart is a market. They sell you something, they make profit. Theoretically you can resell what you bought for profit. The profit potential for you is minimal because the people who sold you the stuff have already taken away most of the potential.

Stockmarket-mart and FX-mart are markets. They sell you something, they make profit. Theoretically you can resell what you bought for profit. The profit potential for you is minimal because the people who sold you the stuff have already taken away most of the potential.

 

[Quantt]

I'm just wondering whether this makes sense to combine the two like this and whether you do yourself.

Yes, it does make sense, but personally I don't do it, because I cannot find reliable data to back test trough different market cycles... Numerous examples of companies lying while providing fundamental data, for the crypto currencies I won't even comment, because for me those are not investment grade products...

 

[tomorton]

Using FA for targeting and TA for timing entries is a classic approach. It has been used successfully since stock markets began. Your approach to investing sounds very rational.

The big difficulty however isn't finding things to buy or discovering when to buy them on, its knowing when to sell them. It is the exit that makes the money - either for you as your profit or for someone else as your loss. It is inevitable that some positions will turn into losers (nobody has a 100% win rate) so your plan needs to encompass how you will identify these and what you will do about them and how you will know when to do it. All being well, many positions will be the winners you were hoping for, but an unrealised profit in a position counts for nothing when you have to pay your household bills.

Objective No.1 has to be a detailed trading plan. Its an unglamorous job, but so is checking your safety ropes when you're about to set off up a mountainside.

 

[new_trader]

I learnt the hard way that the Fundamentals that get you into a stock can literally change overnight and make your stock worth less, or even worthless. That's why for me, everything is Technical Analysis. The tape cannot lie.

 

[progix]

In my opinion every trader is almost trading while looking at the technical side, even the EAs are coded specifically to follow the technical analysis and that is why they are required to be monitored during the news releases where market becomes extra unpredictable.

 

[Henow1969]

In forex, every trader wants to master technical and fundamental analysis. Unfortunately, most of the traders failed in their mission. There is something beyond the technical and fundamental issue that is trading psychology. Unless a trader develops strong psychology, he can no win passion and cant catch the pulse of the market .

 

[hatemypips]

Fundamental analysis gives direction of the trend, technical analysis clarifies points for entries. Sometimes it's better to wait for a price to hit or resistance to make better entry.