Fundamentals

Through this website, we hope that you, the trader, will be able to reach profitability. We feel that the quickest path to profitability is reached through a thorough understanding of technical analysis as well as a trading method and plan which gives an individual an edge in the financial markets. This said, however, a trader cannot focus solely on technical analysis and totally ignore fundamental analysis.

Fundamental analysis is the study of the underlying economic and firm-specific events which are represented by the securities which we trade. For example, when we are trading a stock on the stock market, we are really trading shares in a company which provides a good or a service to generate revenue. If we were to focus on the company or the economy under which the company operates, we would be focus on fundamental analysis. In other words, fundamentals are the underlying forces which cause company's to fluctuate in price. In the real world, things such as income statements, gross domestic product, and unemployment numbers move the market, not moving averages and support and resistance.

In order for a trader to successfully profit on the market, they must be away of the fundamentals and news which affects the instrument they trade. A trader must be aware of how their security fluctuates in response to "good" and "bad" news. However, a trader does not need to master fundamental analysis to excel and profit. In fact, the best course of action for a trader to pursue in the event of a news announcement or a gross domestic product figure would be to stay away from the market.

For an individual to be buying or selling during a news announcement or press release about their stock, currency, or whatever they are would be gambling. Unless a trader specific focuses on and specializes in trading the news, traders should avoid the release of new information like fire. A trader is seeking the highest probability of success with the least amount of risk. When news is released, both panic and greed are strongly present in the underlying security which can cause incredible fluctuations in the stock price. As we learned in the risk section of this website, fluctuation is volatility which is risk. By trading during news, individuals expose themselves to unnecessary degrees of risk.