Technical Or Fundamental & Why?

[Doomberg]

It seems to me that there is a massive difference on opinions with this, i know many successful traders who say "I don't even look at the charts, i trade purely on Fundamentals" yet i also know successful traders who don't care about Fundamentals and simply trade on what they see / calculate in the charts.

Which do you prefer, and why?

 

[Martinghoul]

I prefer things I can understand...

 

[Shakone]

Both. Because they're both useful.

 

[robster970]

+1

Both. Because they're both useful.

 

[Doomberg]

Both. Because they're both useful.

Agreed, but i got told by someone who works at an Australian hedge fund "Come on mate, don't go all technical... technical traders waste their days looking at pretty little charts, fundamental trading is better and much easier"

 

[leonarda]

It seems to me that there is a massive difference on opinions with this, i know many successful traders who say "I don't even look at the charts, i trade purely on Fundamentals" yet i also know successful traders who don't care about Fundamentals and simply trade on what they see / calculate in the charts.

Which do you prefer, and why?

Both:

1. Use technicals as most traders and HFT systems use them so technicals tend to be self-fulfilling, hence it gives you an edge as long as you can read them right...
2. Fundamentals help give you that "extra" edge, particularly with stocks. Best buy the stock with low net-debt, strong eps/profit/dividend growth, than the stock with large debt, poor growth etc... In a rising market the better stock is going to rise more...(but you still need to watch the technicals, hence "both")

 

[Liquid validity]

It seems to me that there is a massive difference on opinions with this, i know many successful traders who say "I don't even look at the charts, i trade purely on Fundamentals" yet i also know successful traders who don't care about Fundamentals and simply trade on what they see / calculate in the charts.

Which do you prefer, and why?

Preference is irrelevant.
Its a tool in a toolbox thats all.
Pick the tool for the job 🙂

 

[forker]

Technicals are merely reference points in a fundamental bias

 

[fihunts]

To purely trade technical and ignore news is very foolish. While trading purely news and no technical is equally foolish.

I primarily trade technical, however I do pay attention news updates. Sure, my charts might be showing me a perfect entry into a trade to go long and low and behold here comes some news that will totally send the trade in the opposite direction.

Similarly, Some decent news comes out on a particular currency pair, but if its already sitting at a resistance point. I might be better served if I waited for the breakout to occur and not get faked out.

So, I think both are important to some degree.

 

[DashRiprock]

well if u wanna trade on fundamentals you gotta be able to value something innit bruv?

trading "all" on technicals isn't stoopid if

a) you use high quality information in intelligent ways
b) you have no edge in fundamentals

I have no clue about how to value a sausage let alone a stock or bonds currency (OK well maybe the basics but no way enough to have an edge in dislocations between what I consider fair value and market prices)

BUT

I do have an edge like now buy buying US equities into the close

peace out

 

[iota]

Technicals are merely reference points in a fundamental bias

I was gonna try and tap out my own response but that was pretty much what I intended to say and far more succinctly.

 

[DionysusToast]

It seems to me that there is a massive difference on opinions with this, i know many successful traders who say "I don't even look at the charts, i trade purely on Fundamentals" yet i also know successful traders who don't care about Fundamentals and simply trade on what they see / calculate in the charts.

Which do you prefer, and why?

Why are these the only 2 options?

 

[Masquerade]

Why are these the only 2 options?

Pros use these.

 

[Doomberg]

Why are these the only 2 options?

Please add your own if i have missed out, i wasn't aware there was anything else that didn't come under these twos umbrellas

 

[spreader_legger]

I believe there was a chap here not so long ago who relied on scripture for his entry and exit criteria👍

Why are these the only 2 options?

 

[DionysusToast]

Well - I would imagine Arabian could give a third type - he's using the order book to define his entries.

Order book scalping doesn't require fundamentals or a chart so it's not TA or FA.

I always think of Technicals as "Technical Analysis" AKA - all the stuff on trading sites & in trading books. As such, there is nothing in any TA book I've seen about the games that are played where people with deep pockets sucker other traders into positions and then run them over.

A simple example would be an intraday double top that moves down, gets sellers in and then someone comes along and pushes price up so that they all puke.

If you were specifically trading these scenarions, I guess the TA people could lay claim to it being in their domain. In my opinion, it's somewhere outside of TA because TA won't ever tell you which double top is a fake and which isn't. In fact, you can never know but you can make an educated guess.

It seems to me, the TA people want to claim any technique as part of their domain. Spotting a head fake and spotting a moving average crossover or candlestick pattern isn't the same game or even close.

One final thing - someone on this thread has said that fundamentals give you an extra edge. I don't see how this can be the case unless you are finding something out that isn't common knowlege.

This has been on another forum of late. I think the differentiation is in cause and effect. Technicals is the analysis of effect. I think that when you are looking for cause based on price action/order flow, then you are not in the domain of TA any more.

 

[DashRiprock]

rite Im about to put my Donald Rumsfeld hat on and dish out a plate of...

tHE mARKETS aCCORDING TO dASHrIPROCK eSQUIRE

look at the pic i made, its even so good that i put it on the internet already

look in trading the basic thing is to compare 2 or more information points and make a trade off the back of it. That is the essence of trading and alot of other things.

now read this for explantions:

red square -> red square
stock ABC is underpriced by market
good example: stock trading less than hard asset market cap
bad example: man united are going to win the premiership

green square -> green square
market is over reacting
good example: fading moves from position liquidations
bad example: NFP beat estimates so buy all the way down

yellow square - yellow square
I know something the market doesn't
good example: proprietary model for payrolls data different to concencus estimates
bad example: my aunti beryl is coming from austraila and she'll buy loads of postcards
(or insider trading)

cyan square - cyan square
company A is in better shape than company B
good example: macdonalds will price burger king out of emerging markets
bad example: Im never going to tescos again!

pink dot - pink dot
most technical analysis
good example: pair trading
bad example: RSI crossed from 71 -> 69

purple dot - purple dot
tape reading
good example: market ignores negative data
bad example: there are more bids than offers so buy it

So there are lots of different types of information and lots of good ways and bad ways to use it all.

Now watch this drive!

 

[Doomberg]

Lol at how you come back with "Well, the 3rd type of trading is Arabians order book scalping"

And where do i learn about knowing if a candlestick move is fake, eg fake double top / bottom etc?

Cheers

 

[DashRiprock]

Lol at how you come back with "Well, the 3rd type of trading is Arabians order book scalping"

And where do i learn about knowing if a candlestick move is fake, eg fake double top / bottom etc?

Cheers

experience innit

 

[DionysusToast]

Lol at how you come back with "Well, the 3rd type of trading is Arabians order book scalping"

And where do i learn about knowing if a candlestick move is fake, eg fake double top / bottom etc?

Cheers

There's a book out there called "No BS Day Trading" - it's $40 and comes with a video.

That'sd give you some insight.