Hello everyone. I’m curious to know what experience traders thoughts are concerning technical vs fundamental trading.
Hi Biggrass
There will be many on this site who will argue one way or the other.
A lot depends on what instrument you are trading and on what timeframe you are trading. So really it is not a simple answer.
I trade options on the Futures Market and a lot of my decision making will consist of both technical and or fundamental analysis. Options are usually traded on a daily chart and can be held for as long as 55-60 days. The reason for taking a trade like that may be due to seasonal reasons: IE wheat or soybean planting or harvesting or news on what OPEC is doing with the price of oil. Recently I traded Lean Hogs on the news of swine flue in Asia.
However for timeframes of less than a day I look more towards technical analysis. But again I will not take a currency trade that involves a currency whereby there is impending major news about that currency. A good example of this is I never look to trade currency pairs involving the USD when they are about to release Non Farm Payroll figures.
Hope this helps.
Cheers
Blackduck
Thanks for your insight Blackduck.
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For me one of the biggest pros of Technical Analysis is it gives you specific price entries and exits.
How do you know if a trade based on fundamentals is wrong? They dont change regularly enough for that.
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There are no “vs” it has to be both. If you limit yourself to only one, you are losing crucial info.
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I dont think it has to be both at all. Jim rogers never uses technicals and Ed Sekota never used funnymentals.
Both can make you money - but how they do it are miles apart.
As for missing crucial information - if i weighed up every piece of it out there id probably never make a decision.
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I combine them both because they complement each other (work better in different market phases). When there are no news market tends to behave predictably near technical levels, when some news appear its time to turn focus on analysis of supply&demand changes because market participants tend to change their expectations and adjust positions according to the news impact.
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maybe they did as you say, maybe they didn’t… 
If you search enough you may find prove for every single theory in trading.
During different ages, many techniques or instruments were considered to be money printing machines. Take the most recent example with cryptocurrencies before 2018. Probably everybody in this forum has a friend who had made money that way.
I know a guy who made 2 million on a gut feeling and $300K invested in Bitcoin (I hope he didn’t lose them after 2018). He doesn’t know a thing about FA or TA.
You can try trading the turtles’ system but it will cause a lot of pain in today markets.
But the real question is not how they did it but how we, you and I, can do it? Maybe there is something you can get from Rogers and Seykota and adapt it.
That being said, putting the fundamental analysis out of the equation we are just limiting ourselves.
I leave fundamentals to those more knowledgeable than myself.
I do pay attention to extrem COT dealer positioning - afterall they are the ones who really know whats happening fundamentally.
But extreme COT positioning is rare and certainly not something you can use on a daily basis.
The only real fundamentals i see affecting things I see are inverted yield curves , junk bond spreads/treasuries and real interest rates.
As for following every data release out there - utterly worthless IMO.
I dont trade turtles system at all - the subject only came up because of systems out there for free online.
Many online systems can be adapted the turtles being one of them.
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At the end of the day this website is devoted to beginners and trying to help them succeed.
I have nothing against fundamentals but I think for the effort it takes to understand it with maybe only a marginal increase in results from using I think newbies are best concentrating on technicals and emotional control.
I am in no way denying that riding a fundamentally driven trend is better - but is it really the best way for newbies to start in this business?
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I think both work, different traders just have different preferences for various reasons. It depends on the individual to pick the type of analysis they think works best for them.
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I use fundamental analysis (COT report) to pick the direction (long or short). I then use technical analysis for my entries and exits.
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I think both methods work but when it comes to fx the underlying fundamentals are a bit more complicated then stocks because of the number of factors and correlations involved.
With stocks one can analyze the annual report or inherit fundamentals to gauge the intrinsic valuation of a security in comparison to the current market valuation but with currencies the pricing of a currency pair based on the underlying fundamentals is much more difficult due to the complexity and the number of variables that go into pricing that pair.
Not that it cant be done but in all honesty its just something that’s beyond my ability to do as a trader.
Thats why I focus on the techinicals instead because its my belief that all fundemantal data Is reflected in price, so instead of making projections based on fundamentals I wait for the technicals to reveal the truth by way of price.
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“trendline breakout backed with fundamentals is better than a simple trendline breakout” Larry Williams
The problem with technical analysis is that it makes everything to look easy. If it breaks this trendline, that support level, neckline, triple top, pin bar, or if that MA crosses this MA, and we have a trade.
Then comes “to make more money we need to trade more” which more or less we all (beginners, advanced, experts, pros) share. We see good trades everywhere
That is why we have such 90/90/90 rule in this business
Fundamental analysis will give an additional layer in the trading process. Will make beginners more selective and so on.
One has better chances to survive if one combines technical stuff with things outside of the chart.
BTW there are ways to use COT for short-term trading.
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Agree with everything you say - I was unaware u could trade COTs shorter term - will need to look this.