Combining Investing + Trading

Discussion in 'Professional Trading' started by stocktrader3429, Jan 23, 2007.

  1. Here's my strategy and I was looking for some feedback on it. I'm a huge believer in fundamental analysis and I essentially like to invest for the long-term (no more than 1 year, though). That's mainly due to tax brackets and my preference.

    Lately, however, I've been pulling out early. In some of my trades, I've managed to make a lot of money or very little before the pull back. However, I haven't lost money thus far (I manage a small portfolio of stocks, which is why I haven't experienced too many loses yet.).

    Now, I would like to reap in the benefits a little too soon regardless of the tax bracket. If I can pull it off, I will make more money even after the taxes are taken out.

    So, what I do now is base my picks on fundamental analysis, put a stop loss at 5% and when I hit my target, I exit. Then I either reinvest in the same company or pick another one.

    That way I'm looking at far more rapid results. Another thing is that I"m not too desperate for short-term results. I could wait a year for the stock to breakeven or whatever, so all short-term gains are really bonuses.

    What do you think about this strategy? (Using fundamental, long-term analysis for short-term trades.)
  2. Retief


    What do you think about this strategy? (Using fundamental, long-term analysis for short-term trades.)

    I would reverse your strategy, and use technical-analysis to time entries in a particular direction on stocks according to fundamental analysis. More particularly, use your fundamental analysis to select a group of stocks that you believe to be sound, i.e., growing earnings, sales, and free-cash flow, low price-to-book, etc. Then use technical analysis to select a subset of these stocks that you expect to go up very soon, rather than languish and provide no useful return on your capital.

    Reverse the procedure for shorts.
  3. When you say reverse it for shorts, you mean stick with the original strategy, but reverse it for longs, right?
  4. Not quite. Reverse the analysis - as in look for poor fundamentals to identify possible short prospects.