December 9, 2018

Main benefit of technical analysis over fundamental analysis

... the main benefit of technical analysis over fundamental analysis is that the charts provide a very specific right or wrong point where protective stops can be placed and monetary losses can be limited. As you'll see shortly, the limitation of losses is paramount to the success of a trader and an investor, both financially and psychologically.

People may be forewarned of situations such as the collapses of Bear Sterns and Enron by the deteriorating price action. Knowing when one is wrong using fundamentals, though, is a very grey area. Depending on the style of analysis employed, the lower a share price goes below its valuation may mean the better value the stock becomes. On the other hand, it may mean the valuation was incorrect to begin with. It's a hard ask for any analyst to amend his or her analysis and valuation in the face of a plunging share price – they are usually only forced do so after the fact and after the monetary damage is done.

Read more at http://www.vfmdirect.com/info/successful_stock_trading.pdf

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