is fundamental analysis bullshit?
- Thread starter cole_
- Start date
There are several different ways of looking at a chart. There is only way to look at the news and that is to compare it to where the price is when the news comes out and compare that to where it went when previous news came out. It's very straightforward whereas technical analysis is not.
Well, I am talking about forex not stocks.
Forex fundamentals are a very long long term horizont.Do i want to trade or invest, ask yourself.
I have friends who were security analysts at major investment banks.
Now on their own, I asked them how comfortable they would be analyzing companies etc. with only the fundamental information available to them as retail traders. All agreed that they would be just as well off following their gut reaction and/or guessing. The amount of information available is just not there to where a worthwhile valuation can be done. Actually, those who now trade depend on, or are studying, TA. But they do fall back to some extent on their expertise as security analysts mainly due to past experience.
Now on their own, I asked them how comfortable they would be analyzing companies etc. with only the fundamental information available to them as retail traders. All agreed that they would be just as well off following their gut reaction and/or guessing. The amount of information available is just not there to where a worthwhile valuation can be done. Actually, those who now trade depend on, or are studying, TA. But they do fall back to some extent on their expertise as security analysts mainly due to past experience.
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Honestly, although I'm a purely technical/quantitative trader, IMHO a retail trader has a much higher probability of succeeding, just by managing portfolios based on pure fundamental analysis.
I agree with fordewind. Supposedly Jarratt Davis was a total failure until he began (position) trading based almost totally on fundamental analysis, at which point, he purportedly became extremely successful.
Ray DeMedici (is that his real name?) also alleges he does very well (swing and intraday?) trading based on fundamental analysis.
However, as an intraday trader whose approach is based almost exclusively on technical analysis, I used to avoid news releases, but this is no longer true in that I have discovered that if one studies price action thoroughly enough, one finds that currency pairs react to economic news releases in predictable, recognizable patterns that can be incorporated into one’s technical approach to trading Forex so that such events constitute opportunities to realize significant profit rather than chaotic episodes best avoided.
Jarratt Davis notwithstanding, I find that technical trading can be quite rewarding provided you manage to figure it out. It all comes down to what fits you best personally.
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