The hard part is correctly identifying the REAL causes in real time.
When the markets started to rebound after the '08 crash I was 3 months late getting back in because the fundamental reasons for a recovery were not made clear IMO until a good time later. Those who think otherwise might have no clue what is going on today.
The MACD cross over at an uber-low level should have been enough of a signal in retrospect. OTOH I got completely out of the markets 2 WEEKS before the big crash and that was also because of growth just not making sense at the time. Investors who did it differently probably sold for much less and bought for much less - if they didn't stick it out the whole time.
I rely on both a grounded sense of the fundamental reasons an equity has to rise and the charting patterns that give buy/sell signals. My favorites are the double tops/bottoms, symmetrical triangles and ascending or descending triangles - found in all time frames. Lost out on a lot of money selling 1/2 the silver contracts under 41.80 and it was the F#$*ing move I've been waiting for.
Can there be a perfect balance between fundamental and technical analysis?
If you can only trade on one I think technical analysis has weakened but is more dependable. Market Price Structure: it takes into account the fundamental news that has or is expected to occur through price action. With a little help from the fed and absent quote stuffing...
But I like this sentence, as to some extent it points to the feedback loops, which are reflected by price, as it creates new feedback. Technical analysis uses feedback as being displayed by price, fundamental analysis has its focus on the triggers, which change the feedback mechanisms. That said, feedback caused by price feeds back into fundamentals, so price is everybody's bride in that eternal game of growth and decline.
George Soros called it reflexivity. What he wanted to say is that the causes and effects are multilateral. Fundamentals have an impact on price, but price also has an impact on fundamentals. L'être et l'apparaître, they are not independent.
The following user says Thank You to Fat Tails for this post:
It is interesting that we have seen the terms "Technical Analysis" and "Fundamental Analysis" used in the thread as if there are 2 distinct and seperate ways to look at the market.
Often on trading forums we see TA vs FA and much debate over one vs the other.
In my opinion, we would be better off analysing the difference between objective analysis and subjective analysis.
Almost all traders have taken for granted that markets can be traded objectively with a fixed set of rules, so when they approach any analysis technique, they search for fixed rules to apply and to apply them to quit a tiny slice of market action.
Anyway - I'm all for cause.
Some people say "Trade what you see, not what you think", I personally think that if you can see it & everyone else can see it - it's already too late.
The following user says Thank You to DionysusToast for this post:
...and once the watch is ready, tell you the time he started building it. Just to comply with the habits of technical analysts. If I was capable of building watches, I would not post here, but build watches instead.
I wonder if you could change the color of the face of the watch you built for me ... and add arrows to show when the little hand passes the big hand... I would do it myself , but I notice most traders just ask you ....
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
The following user says Thank You to ThatManFromTexas for this post: