I think so too - combining technical and fundamental analysis seems the most practical. One should always be aware of fundamentals and how they affect the market but technical analysis can also be an invaluable tool.
Fundamental or technical analysis?
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I think so too - combining technical and fundamental analysis seems the most practical. One should always be aware of fundamentals and how they affect the market but technical analysis can also be an invaluable tool.
I share your idea about equilibrium. But I find it really subjective. How can you say for sure that a given position is out of equilibrium just at lookind at TA ?
My strategy is not optimal but I feel safe with it : I am looking at FA to pick the stocks. And then I look at TA to try to choose my timing. Sometimes I am good sometimes not, but in the long term the FA takes over. The drawback is that I do not always control the time needed to return to equilibrium and that makes me hold position that I would rather not have.
dbphoenix
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You may find this post interesting:
I'm also working on something regarding equilibrium. Considering the environment in which we're trading, it may provide food for thought and possibly keep the unwary out of trouble:
“Equilibrium”, “value”, “balance” have all been addressed. Rather than go into all that again, I’ll depend on the interested reader to use Search with any or all of these terms to brush up on what they are all about. As for those who are up to speed in this regard, I’ll begin by reiterating something I posted earlier.
Traders who have longer-term timeframes and traders who have shorter-term timeframes are fated to trade at cross-purposes only if the shorter-term traders don’t understand and accept that it is not they who are in charge. They just don’t have the money. And it’s money that moves markets. Shorter-term traders who understand that they are reactive will cultivate the patience to wait for those moments when traders trading more than one timeframe are all trading together and exploit that behavior for their own benefit. This dynamic can be seen most days when traders in more than one timeframe seek direction during the first thirty to ninety minutes. If nothing’s happening, they withdraw, and price drifts sideways for a while, sometimes for the rest of the day. The short-term trader who doesn’t understand what’s going on will try to force a trade out of this and will end up with little to nothing, or even a loss. The short-term trader who does understand what’s going on will sit on his hands and wait, and observe, and look for those clues which indicate that several categories of traders in several timeframes are on the same track and travelling the same train. This is most clearly seen during climactic highs and lows, when practically everybody is on the same track going the same direction but is also seen in the more low-key breakouts that often occur after extended sideways drifts during the morning session.
These sideways movements can drive the daytrader and short-term swing trader crazy. These sideways drifts were particularly common during the internet bubble, when big afterhours and pre-open moves would get daytraders all excited, but when the market opened for business, price just drifted sideways, even at a downward slant (making big money, or any money at all, was not quite the slam dunk you may have read it was).
These breakout/drift and drift/breakout phenomena occur frequently, sometimes more than once a day. It can seem to the unwary that somebody is trying to “trick” him. More likely he just doesn’t understand that he’s trading with others who are interested in different timeframes.
Unless you're trading something that is mean-reverting, equilibrium can be fleeting, sometimes lasting for only minutes. Monitoring larger bar intervals in order to track what The Money is doing may help keep you on the right side of the trade.“Equilibrium”, “value”, “balance” have all been addressed. Rather than go into all that again, I’ll depend on the interested reader to use Search with any or all of these terms to brush up on what they are all about. As for those who are up to speed in this regard, I’ll begin by reiterating something I posted earlier.
Traders who have longer-term timeframes and traders who have shorter-term timeframes are fated to trade at cross-purposes only if the shorter-term traders don’t understand and accept that it is not they who are in charge. They just don’t have the money. And it’s money that moves markets. Shorter-term traders who understand that they are reactive will cultivate the patience to wait for those moments when traders trading more than one timeframe are all trading together and exploit that behavior for their own benefit. This dynamic can be seen most days when traders in more than one timeframe seek direction during the first thirty to ninety minutes. If nothing’s happening, they withdraw, and price drifts sideways for a while, sometimes for the rest of the day. The short-term trader who doesn’t understand what’s going on will try to force a trade out of this and will end up with little to nothing, or even a loss. The short-term trader who does understand what’s going on will sit on his hands and wait, and observe, and look for those clues which indicate that several categories of traders in several timeframes are on the same track and travelling the same train. This is most clearly seen during climactic highs and lows, when practically everybody is on the same track going the same direction but is also seen in the more low-key breakouts that often occur after extended sideways drifts during the morning session.
These sideways movements can drive the daytrader and short-term swing trader crazy. These sideways drifts were particularly common during the internet bubble, when big afterhours and pre-open moves would get daytraders all excited, but when the market opened for business, price just drifted sideways, even at a downward slant (making big money, or any money at all, was not quite the slam dunk you may have read it was).
These breakout/drift and drift/breakout phenomena occur frequently, sometimes more than once a day. It can seem to the unwary that somebody is trying to “trick” him. More likely he just doesn’t understand that he’s trading with others who are interested in different timeframes.
Db
