“Fundamentals” is just another data stream, one that does not offer entries or exits in terms of prices but in terms of events. Saying that losses in trading are the result of the failure to adopt the usage of those sorts of entries and exits is just the same as saying “you are losing because you are not taking entries and exits on the 20 day moving average” or “you are losing because you are not entering and exiting against the net retail position indicated by this sentiment index” or “you are losing because you are not trading MY METHOD”.
[B]Jack Schwager was asked[/B]: “[I]How do great traders go about finding their approach to the markets? What would you say sets them apart?[/I]”
[B]His answer:[/B] "Novices tend to believe there’s some answer out there, that it’s a matter of finding the right formula, the single right technique. That’s why books like, “How I made a million dollars trading in the markets,” always sell well.
The truth is it doesn’t work that way. There is no single way that works continuously. If it did, it would stop working anyway because everyone would follow it.
It’s really a matter of finding a method that is right for the person. It varies all over the place because there are people like… [Jim] Rogers who have complete disdain for technical analysis. He’d say that the only people he’s met that make money in technical analysis is those that sell their technical analysis services, that’s his take on it.
On the other hand, you’ve got people like Martin Schwartz who’ve done phenomenally well. He’d say: ‘I spent a decade as a fundamental analyst, but I got rich as a technician.’
Believe me, Rogers could never make money using technical analysis and Schwartz could not make money using fundamental analysis. Yet, they both do terrifically well.
The very first thing to get across to people is you’ve got to figure out what is the right method. [B]It’s not just fundamental versus technical[/B]. Either you are short-term, or you’re long-term. Do you want to trade stocks? Do you want to trade futures? Do you want to trade currencies? On and on with the variations.
It’s a discovery process, an evolutionary process. [B]Nobody can tell you that[/B].
I get emails from people sometimes. They’ll say, “What trading method would you recommend?” To me, the question is a lot like “I’m going to buy an expensive suit. What size should I get?”
How would I know? I don’t know if you’re six-six or five-five, so you can’t answer that question. There is no answer to that question. There is no right sized suit for everybody, and people need to think of trading the same way. There is no right size trading method for everybody."
-Adrian
