Thursday, April 17, 2014

TechniTrader Weekly Stock Discussion “Technical Traders vs Fundamental Traders” by Martha Stokes CMT

MetaStock® SPRS Series - Week 167 – April 18, 2014 - MetaStock Spatial Pattern Recognition Skills Series written by Martha Stokes CMT  

Many times technical traders, those who use technical and stock chart analysis exclusively are baffled by how a stock chart reacts to news, support or resistance, or major index down days.  It seems as if the stock is not behaving technically as it should.
What technical traders fail to understand is that chart analysis is a window into the world of fundamentalist mindset.  There are far more traders in the market who are fundamentalists or use quantitative research for their stock pick selection than there are technical traders.
Since most technical traders are from the retail side aka the everyday average investor/trader, it seems inconceivable to them that someone would not use technical analysis. However in recent survey of over 50 smaller funds in the San Francisco area, none used technical analysis and only 2 were interested in learning how to use it.
This is a common theme among the fundamentally based smaller funds groups.  It is unfortunate because those funds that do employ not only fundamental, quantitative, and risk analysis but also use technical analysis have a far higher Rate Of Investment ROI than those merely using fundamental and quantitative analysis formulations.
Nowadays it is far easier to incorporated more data into the stock chart than ever before.  Some charting programs now have critical fundamental data incorporated into the charts, allowing you to use this information along with pure technical analysis.
Just as when fundamentalist use more of the 4 major analyses in their final decision making process, so too when a technical trader uses some basic fundamentals profitability increases significantly without adding more workload or time.
A quick way to add crucial fundamentals to stock charts is to use fundamental indicators. These can be technical indicators based on fundamental data such as quantity uptick/downtick formulation which separates out the large lots from the smaller lots, to line indicators using fundamental data.
Employing accumulation quantity volume oscillators and TechniTrader Flow of Funds TTFF indicators  reveals when institutional interest is rising.

The ability to incorporate not only technical analysis in your stock charts but also vital fundamental data, quantitative analysis, and risk analysis means that your stock charts are working harder for you and you are working less with better and more complete analytics, more information that is easy to interpret, and a superior method of interpreting what price will do next.
Professionals enjoy a 90% rate consistently. This is due to the fact that they use the best tools they can find and are willing to pay for those tools, to gain the enormous advantage that superior tools will give them.
Retail traders often pinch pennies and throw away dollars by trying to get by with a free charting software on the internet, that doesn’t have even a fraction of the tools needed to be consistently successful.
Professionals and semi-professional traders are all going to be using these new tools that incorporate not only technical analysis but also fundamental data indicators, quantitative analytics in scans and sorts, risk analysis, with assessment and evaluation all within the charts.  
All traders need to consider if they are just doing trading for fun, as a hobby, OR If they are truly serious about becoming consistently successful and making money from stocks or other trading instruments.
If you want to be a member of the professional or semi-professional traders who earn high income, then start with your charting software.  Incorporate as much of the 4 analytics as possible in your charts.
For information on “Retirement Investing - The New Fundamentals” go to
Trade wisely,
Martha Stokes CMT
Chartered Market Technician
Member of Market Technicians Association
Master Rated Technical Analyst for Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader Stock Market Courses
For additional training visit
This Stock Discussion and Training Lesson is sponsored by
MetaStock® Partner

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