Dump it Here

[Skate]

Common ground between Fundamental and Technical Analysis (Risk)

Risk
Managing the risks is one of the most important issues of staying in the trading game. Most traders will trade differently however the similarity between all good traders is to keep losses small.

Skate.

 

[Skate]

What to believe
Everybody talks about technical or fundamental analysis as they know it's and feed it to all the amateurs.

Trading is not a sprint
Like all skills, trading is a lifelong pursuit & if you are driven enough for financial freedom and accumulating wealth you better make yourself comfortable as it takes an extraordinary length of time to be good at it.

Skate.

 

[Skate]

Technical analysis

Technical analysis works only when you have full knowledge about it. After gaining knowledge how well you analysis depends upon the practice.

Skate.

 

[Skate]

Fundamentals work, so does Technicals

Important
I've seen it, have you, the fundamentals are good but stock is falling every second day.

This is where technical’s help you staying away from cooked books.

Skate.

 

[Skate]

Technical analysis is a way to become a trader or investor.

Charts
The charts make no sense until you put a moving average on it, then it makes a little more sense, then you put on an indicator, and it makes even more sense where the stock can go to, but not always,

Uncertainty is the name of the game.

Skate.

 

[Skate]

The Fundamental case

Where the fundamentals help provide an edge to an otherwise technical holding is the ability to hold and build

ducati916, is correct (IMHO) making that statement above as we all know that Buffett made his money through identifying companies that he believed were worth more than their market value, investing in them and holding that investment for the long-term

Warren Buffet’s method
Warren Buffet’s method is to use fundamentals to buy a great company at a fair price. He doesn’t use charts, and it works very well for him. He sells the companies when someone is willing to pay 'overs' or a silly price, or when the company is no longer great.

Skate.

 

[Skate]

So what's my point?

There are different ways to profit from the markets
(a) Warren Buffet, considered the world's greatest investor, invest based on fundamental analysis only. (looking at P&L Financials)
(b) Ed Seykota, considered the world's best trader, trades based on technical analysis only. (Chart reading method)

My point is...
There are different trading methods that work. You need to find something that suits your lifestyle, schedule, and personality.

Skate.

 

[Skate]

Bloody hell 'Trading is hard work'

The good traders & investors
Will always follows his trading plan.
They will always know how to enter, exit and manage the trade at all times.
They will always keep records of every single trade they take.
The really, really good ones will review their trades on a regular basis.
A good trader will be open to new ideas & they never stops learning.
Good traders even finding ways to improve there trading performance.

There are good times & bad times
Most importantly a good trader knows there are good times & bad times and it’s how they handle the bad times determines how successful they will be.

Skate.

 

[ducati916]

Fundamentals work, so does Technicals

Important
I've seen it, have you, the fundamentals are good but stock is falling every second day.

This is where technical’s help you staying away from cooked books.

Skate.

Surely if the books are 'cooked', the fundamentals are less than optimal.

jog on
duc

 

[Skate]

I don't have a theme, I'm just shooting from the hip at the moment - Beginners might find it helpful if I stick to explanations, rather than mouthing off.

What the hell is "Fundamental analysis"

Broadly speaking Fundamental analysis deals with financial trend of a company .

Estimate its future value
Fundamental Analysis is used to correctly value a stock and estimate its future business/financial performance. Based on its realistic valuation (which is still an estimate only), you would decide at what price to pick the stock.

Skate.

 

[Skate]

Surely if the books are 'cooked', the fundamentals are less than optimal.

jog on
duc

Let me tell you a story ducati916 why sometimes Fundamental analysis gets it wrong & technical analysis isn't Lilly white as it gets it wrong quite often, but lets concentrate on the Fundamental analysis

Let me set the scene
Fundamental analysis is basically a background check of how company has performed and operated in the last years and we can do future estimates using the past data.

I feel sorry for them
People bought Enron as it was a fundamental good company and bought more when it went down. (Falling knife)

Millions of people bought Enron because the fundamental looked good. What I am trying to say is, that fundamental analysis can fool you just as much as technical analysis can fool you.

Skate.

 

[Skate]

Really what is Technical analysis ?
Technical analysis is based on the psychology of buyers and sellers & is way easier to learn than Fundamental Analysis. ( It's easy enough that you could learn it all in a few weeks)

The game of probability
Technical analysis is the game of probability where chances of odd in favour of winning a trade are higher than losing.

Pattern formation & breakouts
Technical analysis is purely based on pattern formation & breakouts, as well as resistance and support levels

Here's the rub
Every analyst has a different view on the same price pattern. (go figure)

Skate.

 

[Skate]

Whats my job as a Technical Analyst ?
As a Technical Analyst its your job is to invest in businesses that are getting emotional response from other investors. (Simple)

Whats my next job ?
Be a risk manager.

What do you mean a 'Risk Manager' ?
Risk Management is all about the proper entry and exit points of a trade so that your losses don't eat up your profits.

Skate.

 

[Skate]

Re. your 5 + 4 = 9, so does 8 + 1 or 10 - 1 [or an infinite combination thereof].

My point: are they standalone, additive, or subtractive to one another?

Fundamental analysis, classically refers to 'time-in-the-market', whereas, technicals are 'timing' the market.

Clearly, timing the market is far more profitable than time in, if, and it is a big IF, you are any good at it.

Where the fundamentals help provide an edge to an otherwise technical holding is the ability to hold and build, over time an ever increasing position. This [obviously] can only really happen if the fundamentals of the position are sound, viz. it will not go to zero. It allows an 'average' holding to be multiples more profitable than a simple buy and hold, unless, the buy and hold goes straight up.

The answer therefore is: they can be standalone, but they can also be additive. Just make sure they are not subtractive, through user confusion.

jog on
duc

I would like to take ducati916 post one step further by saying sometimes its better to combine the two methods if it leads to a better outcome.

Combine Them
Use fundamentals analysis to decide “What” to Buy/Sell, and use technical analysis to decide “When” to do it. Both applied together can be sometimes “most” effective!

Skate.

 

[Skate]

Bugger
I've decided not to use the @ facility as in (@Skate) to call a member to ask for an alternative point of view. (it's very rude & offensive to some)

tech/a
I would love to hear tech/a discuss his favourite Chart pattern & how it helps him in trading

Ann
I'd even be interested in what Ann has to say on Chart Patterns

These are my views as I see it...

Chart Patterns
Patterns looks good in the middle of the chart when you can only trade at the hard right edge.
Patterns look good in hindsight.

Scary
Some Patterns are deadly & can lead you to make a poor decision

Skate.

 

[Skate]

Trading is a breeze (WRONG)

Its worth remembering
What makes sense is usually wrong in trading
The simple truth is that the market is not logical or reasonable.
The market is emotional and unstable.
A market is nothing more than a crowd of people that has absolutely no regard for what any one person may think.
Sometimes its just 'rational' people make 'irrational' decisions.

The markets screw us
The market has the uncanny tendency to screw the most number of people.

Rules
What makes trading so difficult is this: "There are no rules"

Skate.

 

[Skate]

Does it really matter ?

Opposing approaches
Technical analysis and fundamental analysis are often seen as opposing approaches to analysing securities, but many investors have experienced success by combining the two techniques.

Whats your style ?
Investing styles are similar to religions, only slightly less combative (although I’ve seen some discussions get quite heated)
However, just knowing all the charts and patterns won't help. You need experience as well, which comes with time.

Time horizon
Investment time horizon often dictates whether technical or fundamental analysis makes more sense

My final wrap coming up next in the next post..

Skate.

 

[Ann]

Hello there Skate, haven't been here for a while, I have been busy doing business, little time to be awastin' on chatter and point scoring!

@rogue1 when you 'like' one of my posts (I encourage you to 'like' as many as possible) I get an "Alert" and those 'Likes' gives me a direction for future posts.
Meaning
I would rather post on subject that others find interesting rather than what interest me.

My Inspiring quote
"Life is like a dogsled team. If you ain't the lead dog, the scenery never changes"

Success
Success is actually a short race—a sprint fueled by discipline just long enough for habit to kick in and take over.

Effort should always be applauded, but care should be taken when rewarding mediocrity, lest it becomes the goal.

Rightio, figured out the game......you are nearly there Skate!

Darvas box system
Wyatt, Nicolas Darvas trained as an economist & during his time as a dancer, went on to develop what we know as the Darvas box system. Even if you lack the interest in trading it an excellent book to read nevertheless.

It has been many, many years since I read his book but I seem to remember he was only able to be successful with this technique when he was on the road touring and was not able to hear or read any information about the stocks other than the price. (I find a support line to be just as effective.) None of us are in this situation and probably wouldn't want to be. I surely wouldn't.

Conviction
A person with a conviction is a hard person to change. Tell him you disagree and he turns away. Show him facts or figures and he questions your sources. Appeal to logic and he fails to see your point.

I don't agree with this comment Skate. I try to gain as much information as possible about the subjects which are of interest to me. I then hold a conviction/strong opinion. I never turn from someone who disagrees, they can offer me one of two things, another area to explore or
confirmation I am right by the use of an argument which has previously been over-turned by investigation. "Show him facts and figures and he questions your sources." One should never accept any facts or figures without substantiation, that is a dangerous road to travel. It is the road of the gullible and foolish. "Appeal to logic and he fails to see your point." One man's logic is another woman's intuition.

My favourite Two words.
No.
and
No.
This would have to be the most time/money saving word every devised.
Try it!

Concure 100% tech/a. First words my children and animals ever learn is NO! Everything else falls into place perfectly after that. I find it a top word for self control as well. Please and thank you is a courtesy, no is a way of life.

Technical analysis
Technical analysis works only when you have full knowledge about it. After gaining knowledge how well you analysis depends upon the practice.

Yes you are right Skate, to gain full knowledge of Technical Analysis you need to know when it is going up, when it is going sideways and when it is going down. Practice getting to recognize these three things and you will be an expert technician.

Charts
The charts make no sense until you put a moving average on it, then it makes a little more sense, then you put on an indicator, and it makes even more sense where the stock can go to, but not always,

Then you switch off all the indicative bullsh!t and work out is the wiggly line on the chart going up, sideways or down.

I don't have a tag on this forum but if I did it would be one of two and as I can't decide which I prefer I leave it blank.

Tag one... Success is going from failure to failure without losing your enthusiasm.
Tag two... Don't blow smoke up my arse, I can smell it every time.

 

[Skate]

Let wrap this up & let me have my final say on the matter of Technical verses Fundamentals..

The Bottom Line
Sometimes traders & investors like to pigeon-hole themselves into one type of investment style, but being open to combining styles may provide the best opportunity to make the most profit.

Skate

 

[Skate]

Hello there Skate, haven't been here for a while, I have been busy doing business, little time to be awastin' on chatter and point scoring!






Rightio, figured out the game......you are nearly there Skate!



It has been many, many years since I read his book but I seem to remember he was only able to be successful with this technique when he was on the road touring and was not able to hear or read any information about the stocks other than the price. (I find a support line to be just as effective.) None of us are in this situation and probably wouldn't want to be. I surely wouldn't.



I don't agree with this comment Skate. I try to gain as much information as possible about the subjects which are of interest to me. I then hold a conviction/strong opinion. I never turn from someone who disagrees, they can offer me one of two things, another area to explore or
confirmation I am right by the use of an argument which has previously been over-turned by investigation. "Show him facts and figures and he questions your sources." One should never accept any facts or figures without substantiation, that is a dangerous road to travel. It is the road of the gullible and foolish. "Appeal to logic and he fails to see your point." One man's logic is another woman's intuition.





Concure 100% tech/a. First words my children and animals ever learn is NO! Everything else falls into place perfectly after that. I find it a top word for self control as well. Please and thank you is a courtesy, no is a way of life.



Yes you are right Skate, to gain full knowledge of Technical Analysis you need to know when it is going up, when it is going sideways and when it is going down. Practice getting to recognize these three things and you will be an expert technician.



Then you switch off all the indicative bullsh!t and work out is the wiggly line on the chart going up, sideways or down.

I don't have a tag on this forum but if I did it would be one of two and as I can't decide which I prefer I leave it blank.

Tag one... Success is going from failure to failure without losing your enthusiasm.
Tag two... Don't blow smoke up my arse, I can smell it every time.

Ann, you have made some very good points, thank you.

My views
I've posted my views about trading & I've made a few general comments along the way to encourage dialogue. Some members have picked up on what I'm trying to achieve & all members have been kind to respond in the same spirit.

Alternative point of view
There is always an alternative point of view, which is understandable. Having different views expressed gives choice in choosing the view that resonates to your circumstances.

Finally
This 'Dump it here' thread is not about what's right or what's wrong it's a thread about a variety of differing views. A thread to help others by paying it forward.

Skate.