24.07.2025
How to Use Technical and Fundamental Analysis Like a Pro
When it comes to fundamental and technical analysis, there is usually an argument. Which is more important? The loudest ones on the retail trading platform are the novice "techies". They are opposed by young "fundamentalists". They are just moving from universities to the ranks of institutional traders.
Clashes between the two camps will always exist as long as there are newcomers in the market. Carl Jung advised to stay away from them. There is no benefit to be found there. The famous psychologist believed that you can only grow from disputes and problems.
A professional trader has outgrown debates. He will not argue about methods. Like a great football player, he kicks with both feet. And if necessary, he can play with his head, chest, back and anything else. It does not matter what others say. A pro is only interested in the result.
A base of macroeconomics or corporate finance will help to understand the general context of the situation. To calculate price targets, you will need economic models or charts. And when it comes time to press the buttons in the trading terminal, you can't do without technical analysis.
In the book "The Theory of Poker", the famous card player David Sklansky formulated the fundamental theory of poker. It states that a player should act as if he knows the opponent's cards. The closer he is to the ideal line, the more he wins.
Trading is also a "game" with insufficient information. The closer the operations are to the real movement of the chart, the higher the profitability of trading. If you knew exactly how the price would move on a daily basis, standard leverage and several thousand dollars in the account would make a trader a multimillionaire in a day.
But no one knows the future. The trader protects himself from uncertainty with a strategy and diversification of attempts. He needs to find moments when the price with a probability of 60% or more will make the desired action. "Bet" money only in such situations. Then he will have a profit.
These are patterns. They can be based on levels, volumes, indicators and other technical characteristics of trading. Patterns can also be based on changes in economic indicators. If GDP has grown by so much, the currency or stock index may rise in price by so much. If the company's profit has fallen by so much, its shares may fall in price by so much.
The book "The Way of the Turtle" about the trader Richard Dennis presents a strategy on a common indicator, the 50-day moving average (MA). When the price is above this level, you need to buy. When the price is below, you need to close the purchase.
It looks elementary. Dennis earned hundreds of millions of dollars with $400. His strategy had nuances. This is normal. But the general idea is the same for professionals. A trading pattern brings results only if all operations are done according to the system. Without improvisation. Then, even a weakly positive pattern will bring profit.
There are thousands of other strategies. Buying from support. Buying at extreme oversold levels according to oscillators. Buying on a breakout of a price level. Technical analysis is inexhaustible. Its only task is to provide entry and exit points. Then you need to understand what can interfere.
It is often said that "the foundation broke the technique." This means that an important event occurred. It increased oversold or overbought. Threw the price below or above an important level. Some believe that this is part of the trading statistics. Everything is in price and you should not pay attention to it. The legend of the 20th century Jesse Livermore also thought so.
Others disagree. They are sure that if you follow the economy and politics, you can improve your trading results. Before the release of major news, on the interest rate, the results of the US elections or Brexit, you can refrain from trading. Reduce the element of chance.
Each professional bases his choice on his own research. But trading during major political events is really dangerous. The movements are too large. The spreads are huge. There may be technical difficulties with opening and closing positions. These periods are definitely worth skipping.
Everything else is individual. You can not look at macro statistics. Or, on the contrary, drive data into models. Determine the fundamental direction of the trend. Look for entry points in it. The main thing is that it has predictive value. Was included in the strict rules of the trading system. And brought profit.
Clashes between the two camps will always exist as long as there are newcomers in the market. Carl Jung advised to stay away from them. There is no benefit to be found there. The famous psychologist believed that you can only grow from disputes and problems.
A professional trader has outgrown debates. He will not argue about methods. Like a great football player, he kicks with both feet. And if necessary, he can play with his head, chest, back and anything else. It does not matter what others say. A pro is only interested in the result.
A base of macroeconomics or corporate finance will help to understand the general context of the situation. To calculate price targets, you will need economic models or charts. And when it comes time to press the buttons in the trading terminal, you can't do without technical analysis.
"Fundamental Theory" of Trading
In the book "The Theory of Poker", the famous card player David Sklansky formulated the fundamental theory of poker. It states that a player should act as if he knows the opponent's cards. The closer he is to the ideal line, the more he wins.
Trading is also a "game" with insufficient information. The closer the operations are to the real movement of the chart, the higher the profitability of trading. If you knew exactly how the price would move on a daily basis, standard leverage and several thousand dollars in the account would make a trader a multimillionaire in a day.
But no one knows the future. The trader protects himself from uncertainty with a strategy and diversification of attempts. He needs to find moments when the price with a probability of 60% or more will make the desired action. "Bet" money only in such situations. Then he will have a profit.
These are patterns. They can be based on levels, volumes, indicators and other technical characteristics of trading. Patterns can also be based on changes in economic indicators. If GDP has grown by so much, the currency or stock index may rise in price by so much. If the company's profit has fallen by so much, its shares may fall in price by so much.
Technique
The book "The Way of the Turtle" about the trader Richard Dennis presents a strategy on a common indicator, the 50-day moving average (MA). When the price is above this level, you need to buy. When the price is below, you need to close the purchase.
It looks elementary. Dennis earned hundreds of millions of dollars with $400. His strategy had nuances. This is normal. But the general idea is the same for professionals. A trading pattern brings results only if all operations are done according to the system. Without improvisation. Then, even a weakly positive pattern will bring profit.
There are thousands of other strategies. Buying from support. Buying at extreme oversold levels according to oscillators. Buying on a breakout of a price level. Technical analysis is inexhaustible. Its only task is to provide entry and exit points. Then you need to understand what can interfere.
Foundation
It is often said that "the foundation broke the technique." This means that an important event occurred. It increased oversold or overbought. Threw the price below or above an important level. Some believe that this is part of the trading statistics. Everything is in price and you should not pay attention to it. The legend of the 20th century Jesse Livermore also thought so.
Others disagree. They are sure that if you follow the economy and politics, you can improve your trading results. Before the release of major news, on the interest rate, the results of the US elections or Brexit, you can refrain from trading. Reduce the element of chance.
Each professional bases his choice on his own research. But trading during major political events is really dangerous. The movements are too large. The spreads are huge. There may be technical difficulties with opening and closing positions. These periods are definitely worth skipping.
Everything else is individual. You can not look at macro statistics. Or, on the contrary, drive data into models. Determine the fundamental direction of the trend. Look for entry points in it. The main thing is that it has predictive value. Was included in the strict rules of the trading system. And brought profit.
