Broker Check

Technical Analysis VS Fundamental Analysis

Investopedia defines Technical Analysis as: Technical Analysis

Technical analysis is basically analyzing the historical price movement/trading volume in a security to help determine what future price action might occur for that security. Fundamental analysis tries to determine the current value of a security by examining what it sells/revenue growth/earnings/just to name a few. Fundamental analysis has been around for several decades (Value Investing) and by my analysis is an excellent metric to estimate a security’s approximate current valuation. Both analyses attempt to determine when is the best time to buy or sell a security. While I believe both complement each other, in my opinion, technical analysis is most valuable as far as trade timing.

If you want to trade your account personally go for it, but I must urge you to do your homework. I feel quite certain you will be competing against the absolute best traders/brokerage houses on the planet who have honed their trading skills for MANY decades. Having said that, if you still want to go it alone, I feel it necessary and at the very least help to give you a fighting chance with the following five tips*:

1-Learn anything and EVERYTHING about fundamental and technical analysis. The professional traders already know everything about both and have teams of analysts feeding them this information on a real time basis.

2-If you want to be profitable with your trading strategy it makes absolutely no difference what security you take a position in or even when you take that position (buy-go long or sell-go short). The only thing that matters is when you exit/close out your position (IE cut your losses quickly when you made a bad trading choice and let your profits run when you’ve made a great one (and in some cases add to that winning position).

3-Don’t EVER trade against the trend. For example, if you like a particular oil stock and want to go long while the entire oil industry is trending downward you’d better be quite certain that your favorite oil stock has built a better mouse trap and is doing something completely unique in comparison to their competitors.

4-Keep a thorough and accurate record of your trades over time to assure your success and or failure to help determine what adjustments might need to be made.

5-Before you trade ANY real money back test (there is software available to back test your trading ideas and some brokers allow you to test trade with imaginary accounts) your trading ideas on historical securities data…if you’re trading system is not successful on historic data the probability of future profitability is extremely low.

After over two decades of research I take great pride in bringing what I believe are the very best traders and money managers to help my clients reach their goals. To learn more contact me directly at (910) 599-2182 or

*The five tips provided are the sole opinion of Ken Savage and not World Equity Group, Inc.

For more information about our firm and the services we offer, send us a quick email or call the office. We would welcome the opportunity to speak with you.  |  (910) 599-2182