Majority of us are Technical Traders.
We read graphs along with technical indicators and try to estimate the price movement!
The small trouble comes when our analyses is faulty.
But the big trouble comes when we start following the fundamentals as well.
Initially we defend this by saying that we were only verifying the results of our technical analyses.
But we are wrong.
I have seen a lot of amateur traders glued to TV business channels during trading hours...
They keep on listening to news and views and facts and figures and opinions and calls and super commentaries...
All a part of Fundamental Analyses....
All this combined with the Technical Analyses...
The highly surcharged atmosphere of business channels adds the third dimension of "highly influenced psychological state of the trader" in addition to the Technical and Fundamental analyses!
This cocktail of Technical and Fundamental and Psychological bombardment results into panic or ill-placed euphoria resulting into a wrong trade!
We are trained in TA and not in Fundamental Analyses.
Both are vast fields and even an entire life is not enough to master even one of them!
So, while we may be good in TA, we are not competent to do fundamental analyses.
Fundamental analyses is far more research oriented than TA, that is why very few people delve in it!
What we call our fundamental research is only has little research in it and almost no fundamental!
When Technical Analysts start poking their nose in Fundamentals, their subconscious mind picks up only those facts which tally with the results of their TA, everything else gets ignored!
This results in distorted picture or a false double push!
Also, results and advise of fundamental analyses is not specific and hence not tradeable but investable!
Stock price movements are known to disobey fundamentals for some time or an extended period of time!
Moreover, fundamental analyses doesn't take into account the volumes, trader psychology, herd behaviour and the influence of big pockets!
I have seen many great technical traders who just trade by looking live graphs on their PC and keep their TVs switched off.
Some even go to the extent of not listening to End of Day (EoD) news analyses so as not to get influenced by fundamentals.
Someday I am sure I will find a crazy but highly successful technical trader who makes it a point to not to listen to TV news or read a newspaper and just concentrate on Technical charts.
"Everything is discounted in the price" it is generally said!
In the words of TOM BIEROVIC, one of the great technical traders in the world,
“All the fundamentals are summarized perfectly in the current price of the market,”
“Technical analysis is applied social psychology. It's just crowd behavior-hope, fear and greed,” he said.
Bierovic is strictly a technical trader.
In fact, he “makes a deliberate effort to not know anything about fundamentals” !
So, moral of the story is, either follow the fundamentals or the technicals!
Never mix the two.
This cocktail, like the combination of Antidepressants and Painkillers - can be dangerous, even fatal!
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