All my trades are done from a technical point of view. I look for trend lines, s/r, patterns, and check indicators. The only fundamental data I look at are: - Earnings - Fed meetings This has been on my mind a lot over the Christmas holiday. I know fundamentals is mostly tied to investing rather than trading, but I feel like I'm not putting in enough hard work. Should I keep doing what I'm doing, and just keep it simple, or should I dive into more complex things like bonds, oil prices, the dollar, etc.. ? how does fundamental data fall into your trading decisions? cm69
"The best trades are the ones in which you have all three things going for you: Fundamentals, Technicals, and Market Tone. If you can restrict your activity to only those types of trades, you have to make money, in any market, under any circumstances." -- Michael Marcus
What are you trading? Also, the issue isn't if your doing too little or too much. The issue should be are you utilizing the info properly as in does the info help with you to be more profitable. Mark
Over the course of years, fundamentals will matter. However, trading seems to be very loosely correlated with the fundamentals. For example, Mama managed an 800% run in the span of days even though senior management and analysts came out to say that they had no idea as to "why". Energy complex stocks seem to have great fundamentals, however, they have not performed as well as other stocks in the last 6 months. During the late 90s, Cramer had a trading contest in which an 18 year old male who knew nothing about stocks had won. He simply used a stock screener and would pile into companies with the most momentum. This young man even admitted that he frankly knew nothing about what these companies actually did. My opinion is that fundamentals should be moved towards the bottom of the list. I think you should concentrate on where the crowd is going or where they are about to leave. Energy was #1 in the first half of the year and then everything else seemed to follow in the second half. Next year I think China will be #1. I believe you should concentrate most on short term events (like this past election for example). Secondly, technicals and then lastly fundamentals. Personally, I dont think the China stocks have great fundamentals and their long term potential is questionable. However, certain China stocks seem to be tearing it up like LFC. The momentum and crowd mentality is what we should focus on first and foremost... The funny part is that mama is holding onto most of its gains despite all of the big wigs, analysts and blogsters going out to the crowd and telling them that they were full of it.
keep at it. from your posts i read u are doing all the right things, more or less. it takes time, a lot of time.
Buy and hold strategy. Duplicate the Dow Jones Industrial Average. Performance history is attached. Buy and do nothing for 20 years shows a 27.21 % annual growth rate. Draw downs can be great (greatest draw down about 36 %). Is it really necessary to work hard at trading?
O.P. If you didn't beat the SP 500 this year, it's probably not due to the amount of work you're putting into it, but rather other factors. This year's gage of trading success should be outperformance of the DOW and nothing less. If the average trader here hasn't done at least 18-20% return in a year like this, then trading most likely isn't their strong suit. Remember, many here are mistaking brains for a bull market. Many others are waaaay overthinking things (most likely you're amongst that lot), the rest are falling prey to their ego by thinking they can fight things and call tops/bottoms. More than not the last group will not be here because as soon as they go long to get with the trend, it will correct or stop. The first group is just kidding themselves and will probably not last either. The second group, those that over-think things, well this is by far the most interesting of all. Their fate is up to them. Many will break even and just move on to other things after a while and be happy to have given it a go (you know the 9-5 grind, a wife and 2.5 kids and the like awaits them). The remainder of this group will persistent (some will lose it all along the way and come back) and acquire skills over time through the experience of doing. These are the successful traders of tomorrow. There is a lot to be said for just being able to stay in this game. It takes a lot of time to learn how its played. Sounds like you are in control of your success. Is 2007 going to be your year? Is it going to be just another year of tuition payed and high hopes for '08? Will you even be here in 12/07?....... Time will tell. Good trading to you.
This is a great post. Thats exactly how I think of 1999-2000. Many people thought they were great traders and then things changed... In most professions, it takes years to get it right. Doctor, lawyer, plumber, etc. has to go through years of training, trials and tribulations before they become "good". Many people enter the world of trading and investment believing its "easy money". Sometimes it is easy, but then the trend will change and it becomes difficult...
Nothing against plumbers at all, but I dont think I've ever seen "Doctor, Lawyer, Plumber" grouped into the same category