TA or FA or both?

Last time, I was a hard core fundamentalist, analyzing mainly Price Earning Ratio (PE), Return on equity (ROE), Dividend yields (DY), cash flow etc for stock selections.As for macroeconomic study, one has to know about the fiscal and monetary policies that may affect the stock market in each country.As the time passed, I slowly realized that if no smart money to push up a counter regardless of  how undervalued or good a stock is, it will not go far. Always remember that stock market is a money or number game! Hence, following the smart money footsteps will not go wrong! Of course, FA is still important. Buying a stock with a good FA to me is just as important as buying an insurance for myself, if financial crisis happens, although  initially its price may tumble a lot but it will eventually rebound back to its fair value one day. However,the chance is slim for poor FA stocks. Not all good FA stocks will move as there is no big boys supporting it.To me, good FA stocks serve as a catalyst or theme for the smart money to "fry". Later on, I started to learn technical analysis and volume spread analysis myself to strengthen my skills in trading.It works and it increases my chance of winning! However, Big crocs may purposely use TA to trap the retailers eg purposely breaking major support in order to shake out retailers, then buying back at low. (False break out).So one should be able to easily distinguish if it is a shake out or distribution by big crocs. Personally, I prefer leading indicators eg support and resistance plus Fibonanci retracement and also some lagging indicators eg RSI, Moving average (MA 200 for long term trend), Bollinger band.  Among all the informations available from a chart, which I think can not be artificially manipulated, that are always true, these are PRICE and VOLUME only. Hence, I think that volume spread analysis is logical and effective in trading, as it based on the most accurate datas found from chart-price and volume, plus it helps me to track the foot prints of smart money. A little bit more about the qualities of a good trader. A good trader needs 3Ms:Good method. Mindset and money or risk management.You do not have the win all the trades (even the professionals do not manage to do so), you just have to ensure that you lose little or gaining big in every single trade, in the long run, u are making profits from your trades. Be a disciplined traders, setting a stop loss and target or exit price before u trade. (Cutting loss is important but not in extreme oversold condition). Rule of thumb for trading: Do not risk more than 2% of your capitals used for every single trade. Eg, if you have RM 20 000, the maximum amount you afford to lose in every single trade is RM 400 in order to preserve your capitals.

Generally, FA tells u what to buy, TA tells u when to buy!

Kindly share your valuable comments here about your strategy in stocks investment by selecting  Fundamental Analysis (FA) or Technical Analysis (TA) or both?

Option 1 - Look at FA first , followed by TA. Option 2 - Look at TA only
Option 3 - Look at FA only
Option 4 - Look at TA first, followed by FA.

TQ!

The purpose of this blog is to share knowledge, news and personal opinion on investment, economy, stock market etc. There is no guarantee that all the information in this blog is accurate and up-to-date. Invest at your own risk! TQ.