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Fundamental vs Technical

  • #101
  • Jan 17, 2012 1:21pm Jan 17, 2012 1:21pm
Quoting smittens4212

When you start to understand price action, you begin to understand the market in a new way. You know where its going....
Interesting claim!
  • #102
  • Jan 18, 2012 11:47am Jan 18, 2012 11:47am
Quoting pipmutt
Interesting claim!
I'm also with smitten on this 100%.
  • #103
  • Jan 18, 2012 12:55pm Jan 18, 2012 12:55pm
Quoting pipmutt
Interesting claim!
Yeah, it's a pretty absurd statement on the face of it-- if any of us knew for a fact where price was going, we'd be trillionaires.

It was simply made in contrast to EliteJ's statement that fundamentals give you a "feel" for where the market is going-- price action doesn't give you a feel, it tells you where the market is going, regardless. There's no ambiguity (except in the sense that one must be able to consistently apply their own internal rules to observing PA).

As a very simple example, if something is in a bubble not supported by fundamentals, PA will tell you to keep buying as long as there is enough buying pressure to sustain further moves up. Fundamentals will tell you that what is happening is not supported by fundamentals... great. I go back to "The market can stay irrational longer than you can stay solvent"-- in other words, the market will do what it will do regardless of what you think it should do, so the least faulty way to approach the market is to analyze what it will do (price), not what you think it should do (fundamentals), and this can only be done through TA. So then I'm back at square one where FA is irrelevant... imho
  • #104
  • Jan 18, 2012 2:27pm Jan 18, 2012 2:27pm
Quoting smittens4212
Yeah, it's a pretty absurd statement on the face of it-- if any of us knew for a fact where price was going, we'd be trillionaires.

It was simply made in contrast to EliteJ's statement that fundamentals give you a "feel" for where the market is going-- price action doesn't give you a feel, it tells you where the market is going, regardless. There's no ambiguity (except in the sense that one must be able to consistently apply their own internal rules to observing PA).

As a very simple example, if something is in a bubble not supported by...
Not absurd at all if you truly believe what the charts tell you. The reason most of us aren't trillionaires is that we cannot control the fear and greed no matter how much we believe what the charts say. Screentime trains the brain in time but you do have to have both IMHO, belief and screentime.

Price does move in the same patterns on every timeframe only slower the higher timeframes you go, that is the key.
  • #105
  • Jan 20, 2012 11:22am Jan 20, 2012 11:22am
Quoting smittens4212
Completely agree here.



Completely disagree here. Actually really, really, really strongly disagree. The idea that fundamentals could give you a better idea of how far a trend will last over price action is ridiculous and definitely not supported by conventional trading wisdom-- bubbles, overshot market corrections, all these things fly in the face of what you just said. "The market can stay irrational longer than you can stay solvent" after all, is a direct affront to the idea that fundamentals can tell you anything other than where a...
I am not trying to convince you to use fundamentals at all but merely to understand their importance. Without fundamentals there quite literally would be no discernible market for you to play. Even Richard Dennis understood the importance of fundamentals even thou he did not play by them. But he also did not assume to know where the market was going only following a strict set of entry and exit rules. Price action can tell you where price "might" go but only the underlying fundamentals tell what the true value of the currency pair should be. And I'm sure you will disagree with my next statement but here it is technicals do not grant value, that is something warranted by the fundamentals entirely. On the flip side of this, of course fundamentals do not tell you what Bob in New Jersey is gonna do in the market yet his actions may very well change intraday price should he decide to open a position in the market. These are the essences of the intraday market and what give the technical investor the edge in this relm.


Quoting smittens4212
When you start to understand price action, you begin to understand the market in a new way. You know where its going and from there you maximize your returns in the market. No "feel", as that is my whole argument against fundamentals-- there's way too much ambiguity. On an intraday basis, analysts and commentators pay lip service to fundamentals after the movement is done-- completely useless. And their forecasts, while possibly accurate, are irrelevant to day to day trading as the fundamentals in play behind their forecast may not be what's driving...
I agree completely. Although I believe the ambiguity of fundamentals is only your lack of understanding it is not to your detriment if you can be consistently profitable. I laughed a little when you mentioned analysts and commentators, I don't see them as knowing anything except regurgitating whats already common knowledge. I would even take your argument a step further by saying that I don't think analysts that swell the media and newsrooms with their "analysis" know very much at all about forecasting the market because if they did then you could get rich by their word and its very well known that is not true. On a side note I used to watch Jim Cramer's Mad Money on CNBC for a good laugh. It was sitcom worthy in my opinion but of course there were people out there who bought his bs hook, line, and sinker.
  • #106
  • Edited 4:37pm Jan 20, 2012 1:05pm | Edited 4:37pm
I agree that you wouldn't have a market without fundamentals, that should go without saying.

Quoting EliteJ
Price action can tell you where price "might" go but only the underlying fundamentals tell what the true value of the currency pair should be. And I'm sure you will disagree with my next statement but here it is technicals do not grant value, that is something warranted by the fundamentals entirely.
Price action, on any time frame, (1) will tell you what has happened in the past, (2) is happening in the present, and combining 1 & 2 will likely happen in the future (based on the fact that trends are observable, positions are built over time, obvious stops are hunted, etc. etc.). And of course we can't predict with certainty what will happen (although I'm sure there are some very short term traders who have extremely high hit rates).

My problem with the second part of your statement is that value is a completely fluid and subjective assessment. Price is what it is, it doesn't matter if a theoretical 100% objective fundamental valuation of the EURUSD puts it at 1.3000, if it's trading higher it's trading higher, if it's trading lower it's trading lower. In other words, valuations based on fundamentals are entirely irrelevant when it comes to my actual trading, because I don't care about what price should be, I care about what price is. Sure, the EURUSD may end up at 1.3000 eventually, but that doesn't help me if I get wiped out while it trades higher or lower in the mean time. Same exact principles behind why you shouldn't trade a stock based on its PE ratio alone, because none of that actually matters if that's not what is driving price currently.

Quoting EliteJ
I laughed a little when you mentioned analysts and commentators, I don't see them as knowing anything except regurgitating whats already common knowledge. I would even take your argument a step further by saying that I don't think analysts that swell the media and newsrooms with their "analysis" know very much at all about forecasting the market because if they did then you could get rich by their word and its very well known that is not true. On a side note I used to watch Jim Cramer's Mad Money on CNBC for a good laugh. It was sitcom worthy in my opinion but of course there were people out there who bought his bs hook, line, and sinker.
Not to be snide, but couldn't I take your argument a step further too by saying that analysts that swell the banks and hedge funds with their "analysis" don't know very much at all about forecasting the market because if they did then they could get rich by their word? If you were a good enough analyst to forecast price consistently in the future, why would you be an analyst? It just goes back to the 'value' vs. 'price' argument-- it's fine that a good analyst can tell you what the EURUSD should be trading at given the fundamentals, it's another story for what the EURUSD is trading at.

And seeing as you mentioned CNBC, most of the analysts they have on their programs do work for banks and funds, and their analysis is often just as bad as anyone else's, Cramer included. Hell, for that matter, most of the hosts on these programs worked for banks and funds themselves as analysts or traders prior to joining network tv (again, Cramer included).
  • #107
  • Last Post: Jan 22, 2012 10:29pm Jan 22, 2012 10:29pm
combination fo both is the most effective strategy for us, traders.
very nice, good price..!
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