Technical versus Fundamental Analysis - Aussie Stock Forums

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  1. #1

    Default Technical versus Fundamental Analysis

    Could both the technical and fundamental people in the forum write a few words about why they chose that form of trading approach.

    I'd be really interested in why people go the way they do.

    With thanks in advance.


  2. #2

    Default Re: Technical versus Fundamental Analysis


    The steps for me were.

    (1) Technical----initially I was/am a visual person and initially I thought that technical analysis could predict success (it cant!).During this process I moved to (2).
    (2) Discretionary trading----here I learnt that the combination of technical analysis and psychology bring anything but consistancy or long term profits.
    From here to (3).
    (3) Systematic trading.----- losing money wasnt fun---I loved the challenge and loved analysis---putting it into a consistantly paying small business was the ultimate challenge and of course goal----So I developed a plan.---The plan was carefully laid out with all the knowledge and experience gained from items (1) and (2).

    It was like setting out on journey's from Adelaide to Sydney,Load up the car and gas it up look over the mechanics (Technical analysis) Then pick one of the 5 different roads heading in that direction (discretionary).Off I,d go with enough money to get there and enough time,I'd even have some spare cash and time---I also had a map but it only had roads to the border.
    Time and again the road would run out or it would loop around and come back to my starting point---worse still it would go PAST the starting point!
    Every now and then I'd get to Sydney---but more often than not I'd be taking to long or costing me to much to get there.---This led to (4)

    (4) Mechanical trading. I needed a plan that I KNEW would get me to Sydney with as much $$'s left as possible and as often as possible.I didnt want to worry about getting there or second guessing that the route I'd taken was correct.I just needed to know that in the end no matter which way I'd go I'd arrive cashed up.After 3 yrs I found 3 ways that would do exactly that.For 3 yrs Ive been travelling to Sydney without much hassell and enjoying the shopping. But it has led me to (5).

    (5) Maximised Mechanical trading. This is where I'm at now. I'm refining the economy of the way I get there. I'm also maximising the $$s I can get by better using them during the trip.There are sometimes I wont take the trip as its to dangerous---and even if I do get there its cost too much to be worth while.

    So why trade this way?
    (1) I know its profitable and it works---I've proven that (Most importantly to myself---I'm not fussed if others question what I've found--and so they should its MY findings not theirs!).
    (2) Its suits my timeframe---It only takes a few minutes a day and I dont have to be glued to a screen.
    (3) I dont have to KNOW what the company does or how its going--price action does a better job of guaging performance than a room full of analysts.
    (4) Slow but steady wins the race---There are minimal emotions---when you have a portfolio that started as $30000 and its now $200000 a drop in the market even a sizable drop can be seen in perspective--nor do you have to scream SELL SELL SELL down the phone at your broker---well atleast not on day 1 or 2 of a heavy correction.
    (5) Most importantly its FUN---because all those years of loss,discouragement,self doubt---complete doubt---have in the end been proven only to be the challenge that they were in the beginning a challenge NOT an impossibility---there is a way to succeed and the end result is Profit--good worthwhile profit.

    It makes the journey all the more enjoyable----Like running a marathon and making the end----

    Why no Fundamental----Purely because the way you get to profit isnt through analysis itself---Technical OR Fundamental---both are valid ways of analysis. I hate bookwork and I know figures can be made to reflect whatever you want. Price action only has 3 ways it can move. Sideways,Up or Down---less variables!

    I asked my accountant once for my current figures---his reply
    "Who are we talking to!"

  3. #3
    Mmmmmm 2nd breakfast Knobby22's Avatar
    Join Date
    Oct 2004

    Default Re: Technical versus Fundamental Analysis

    I mainly use fundamental analysis.
    For this to work you need to build an understanding of the stock.
    Like technical analysis it can be complex. e.g. look at what tax a company is paying. If it is declaring consistent profits and yet not paying tax then the profit may not be there e.g. Bond's ex company.

    That said, even most fundamental analysis people use some technical analysis. Mainly to work out entry and exit points. To be a fundamental anylist you need to have a long term view. On riskier shares you need to use stop losses.

    There are a lot of traders who operate on technical analysis but only the experienced and proficient who are psychologically suited do well. There are many losers who are really not much better than punters at the races. Girls are better at this than guys so you have an advantage.

    We have had two good years so everyone should be doing well, it is the bad years that sort you out. I am not perfect and am continually learning.

    The advantage of fundamental analysis is that you don't need fancy programs. The disadvantage is that you need patience and it takes time to build up experience and knowledge.

  4. #4

    Default Re: Technical versus Fundamental Analysis

    Tech-A and Knobby,

    Thank you both for your responses. Much appreciated. I did like the road trip, Tech!


  5. #5
    PlanYourTrade > TradeYourPlan RichKid's Avatar
    Join Date
    Jun 2004

    Default Re: Technical versus Fundamental Analysis

    Hi Julia,
    There were some old threads here from some current and past members discussing the topic- a quick search would bring up some great results.

    My posts are not recommendations (even when I rave about something). Always rely on your own research & judgement.

  6. #6
    PlanYourTrade > TradeYourPlan RichKid's Avatar
    Join Date
    Jun 2004

    Default Re: Technical versus Fundamental Analysis

    Quote Originally Posted by tech/a
    I asked my accountant once for my current figures---his reply
    "Who are we talking to!"
    Nice one! Maybe he's a lawyer too?

    My posts are not recommendations (even when I rave about something). Always rely on your own research & judgement.

  7. #7

    Default Re: Technical versus Fundamental Analysis

    Hi Richkid

    Thank you. I should have thought of using the Search function. Will do that.
    Appreciate your suggestion.


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