Do daytraders use Technical Analysis only, or is a mixture? I know long term investors use Fundamental Analysis but do long term investors use Technical Analysis too?
Please browse our blog for more information about technical analysis, don’t forget to checkout the comments section which is where you will find a lot of very useful infornation posted by other traders about technical analysis, look for the comments links
Related posts:
- Is there any practical-mathematical method to evaluate stock using technical analysis?
- How long will you normally hold onto a stock? And would you prefer technical analysis or fundamental?
- What out of technical analysis or fundamental analysis is more important/efficient when day-trading markets?
- Anyone one know of a great technical analysis website?
- Are there websites where we can learn about technical analysis?
- Which is the best Technical analysis software for stocks?
- Can I use technical analysis in real estate market?
- What is the best way to learn stock charts? (technical analysis)?
- How effective is Fibonacci Retracement tool while doing Technical Analysis of shares and stocks?
- Technical Or Fundamental Analysis For ETF
As a day trader fundamental analysis means very little. The minute to minute moves, even the hourly moves are impossible to use as an "edge". Day trading without technical analysis is, for the most part the only way to day trade. To be fair, there are some successful day traders that only use "the tape" to make trades. But, few solely rely on "the tape". Technical Analysis is (by far) the best & most widely used tool of day & swing traders.
I use a combination of the two for long term trades. The fundamentals may lead me to a trade, but the technicals will determine when I get in & when I get out.
Keep in mind…. two very good traders can use TA & come up with different conclusions….. that’s why TA is considered 50%+ interpretation (an art). So…… that leads to the next point;
Needles to say…. trading money management is more important than both. If you’re trading money management skills are not good….. than it’s unlikely you’ll be profitable (over the long term).
yes, long term investors use Technical Analysis too.
Generally, the shorter the trade time, the more the bias to technical analysis. Or at least that is the theory.
In practice, the fund managers use mainly fundamentals, and profitable traders use technical. The reason for that is that fund managers are just aiming to do about the index in gain. Traders want much more, and so they are looking for the trends in the market and in individual stocks and instruments.
How many times have you seen articles about a company full of praise, really making the company sound promising, and talking about the soundness of their business? Have do ever seen a company prospectus or annual report that said the company was crap? Fundamental analysis uses this information to make decisions, but that information can be totally misleading, and often is.
Technical analysis, on the other hand, is based on certain publicly available facts which are undisputed. Those are share price and sales volume. From that, various tools can be used to analyse and create a view on what the share is doing. This cannot be hidden or obfuscated. Where the share is trending becomes very clear.
Most use both types of analysis, but lean more in one direction or the other.
For instance, I am partial to fundamental analysis and I use it to look for potential industries or sectors that seem poised to move up in 6 – 9 months and then when I look for specific companies in those sectors, I’ll look at some charts to see which companies are at a floor and seem ready to bounce back upwards (or broke through the ceiling, etc.). Then I will go back and look at those companies financial statements and 10-K’s to see what they are about.
But that’s just the way I do it.