I asked the question because I know traders that are strictly technical, fundamentals don’t matter to them. Other than day trading, that doesn’t make sense to me.
TA vs FA
- Thread starter KGTrader4
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I asked the question because I know traders that are strictly technical, fundamentals don’t matter to them. Other than day trading, that doesn’t make sense to me.
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OK, like 5 year old learner
;about 80%-99% technical/day+ swing.
CANT really use100% techinicals;
even those who claim100% tech LOL would never confuse SPY with spy balloon or qqq
I'm still surprised by some buying lots low EPs or no earnings i sometimes do that myself, but not much because fundamentals win in the end........................................
Not really; markets can be incredibly inefficient or blind to fundamentals.
What does "triangulate the variance" mean? Would you mind explaining? Thanks
No you have to do both. You can trade using technical analysis but you have to be mindful of news and other fundamental factors and adjust accordingly. For example, if you see SPX is in a bull trend from technical analysis but if Powell tomorrow holds a surprise meeting and says "F*** it, inflation is taking too long to go down to 2%, I wanna increase the interest rate to 10% and I don't give a s*** if the market goes down. F*** the market!", SPX is going to tank like there is no tomorrow, all the technical analysis bull trend confirmation are all going to go out of the door. And this is going to affect all tf's so no matter whether you are scalping or daytrading or swing trading or investing, you are going to feel the effect.
When I used to make a living day trading futures, I used both. I went into a trading session knowing the usual suspect technical levels and macro trends, inter market correlators, and I also had researched in advance the likely market reaction scenarios for the day's economic release numbers.
For the past 15 years or so, I have been swing trading futures spreads using a well thought out and refined TA system.
In summary, one is not necessarily better than the other - but in my personal opinion, Technical will work better for most traders. Reason being, markets frequently don't go along with conventional wisdom and economic releases. Also, it takes a tremendous level of insight and expertise to become really good at fundamentals.
YMMV, I wish everyone good fortune !
For the past 15 years or so, I have been swing trading futures spreads using a well thought out and refined TA system.
In summary, one is not necessarily better than the other - but in my personal opinion, Technical will work better for most traders. Reason being, markets frequently don't go along with conventional wisdom and economic releases. Also, it takes a tremendous level of insight and expertise to become really good at fundamentals.
YMMV, I wish everyone good fortune !
Simple example:
Company A stock price: $150
High EPS $25
Mean EPS $20
Low EPS $ 15
Current Fwd P/E based upon price is: 7.5x
Variance of EPS to stock price= high - low / stock price = ~6%
Normally the variance is low near-term but high long-term. The variance could go from 6% in FY 2023 estimates to 40% in FY 2024 estimates. Earnings are 2% of trading days but much of the volatility. If a company performs well in the quarter or expands its TAM than it may cause a rerating higher, and the mean could shift to the prior high.
So the first step is to understand the variance. The next step is to learn about the views embedded in the high and low estimates. For example, analysts on the high end might believe the company is performing very well and is poised to grow above trend due to strong execution. Analysts on the low end might agree, but point to signs of increasing competition with a much larger company in another but tangential market — their low estimate is based upon meeting with the larger company and reporting that the company plans to expand their footprint in the industry Company A is focused on. Analysts on the high target acknowledge but point to various moats Company A has that will allow it to skirt past competition.
It’s not a clear outcome and could take a few quarters/years to play out. This means that there will be “volatility” in earnings, and probably a significant amount of volatility in price should there be a surprise that validates either of the theses. As this plays out, large investors will position accordingly either by buying or selling — and because it takes them time (due to requirements on % of adv and such), it will drive the trend of the stock (ex-macro, ex-factor) through the period.
To triangulate in this case means that because there is not a simple and clear outcome you are trying to use information around the outcome to determine where you lean.
Ultimately this requires great judgement.
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I updated itThat didn't help for me but I thank you anyway
