For stock trading which is my trading domain, there is more to the studying of company fundamentals than just for example earnings or its finances. When I was an employee in a past life as an on the road salesman, one of my interests was when cold calling, look at the quality and number of cars parked in the company carpark. As everyone is my competitor, I'm not about to give trading trade secrets away on funnymentals.
The problem with fundamentals is that you can be 100% correct about the direction of the market and STILL lose your shirt.
There is nothing "artistic" about backtesting. Here is an example of a backtest: buy when the price closes above the last 20 bars (and vice versa for short positions) and is also above the 50-period simple moving average, 2% stop. Can we make money with this system? If so, what is the average annual return on investment? What is the maximum drawdown from January 2000 to June 2020? See, nothing "artistic" here, just "give me the facts Ma'am". Amazingly, most traders will trade their system without conducting such backtests. In the supermarket they compare the price of spaghetti to save 5 cents but in trading they don't have ANY problem investing thousands of dollars without backtesting their system first (with 20 or 30 years of historical data). Total stupidity.
Doesn't matter, you can lose your shirt over a thousand different reasons. The point I wished to make, price does not factor in all that is known. Heaps of traders, probably the majority, are like cattle running in a stampede because that's the nature of the beast. Nothing wrong with that, but if you want fresh hay, best to wander away from the herd.
True, price doesn't factor in all that is known. But price factors in all that is known to the traders that cause the price. If something is not factored in to the price, then it had nothing to do with causing the price to exist where it did. So, it is not relevant. When and if it becomes known (sudden news, for example), it too will be factored in (gaps). Using the dotcom bubble again: Based on the fundamentals, the bubble should have never happened. Many smart fundamental traders went short, and lost their shirts. Many less smart traders, made a killing. Those ignorant traders we referred to previously, mattered more than the fundamentals. And your only clue as to what those traders are doing, is the chart--not the fundamentals.
One can be either smart or dumb and make money. But smarts will rule dumb in the long haul. Stock prices are not just prices, a bubble price one second might not be that same price the next second and dumb money will be too slow to react. Knowing what's under the hood prepares a smart trader not to enter the trap.
It wasn't a trap to those that got it right. Trading price, using price, can't be wrong. Trading price, using something that you think is controlling price, could be.
yeah a maybe misused “legend” I meant more of “infamous” dude definitely stirred a lot of controversy and got people talking. Shit we are speaking about the man rn
Ya, I take it all back. Forget stupid fundamentals, pure waste of time and energy. How could I have been so stupid, I'm talking bs. Guys, trade the price only, maybe spend the time studying TA & Indicators. I'm on the other side of your trade and love losing.