First let's look at the differences between Technical Analysis and Fundamental Analysis. Technical Analysis is a study of the causes of market movements (what will happen) using historical data and performing mathematical calculations to predict the future. Fundamental traders (what should happen) believe that the markets will react to current events and use information about the financial state of the companies, as well as current political and weather information.

Technical Analysis promoters believe that all or most fundamental insights are already reflected in the price of the securities. Technical Analysis may be experiencing greater interest in recent years due to forged "fundamentals" and seemingly inexhaustible corporate scandal. However Fundamentalists often compare Technical Analysis to voodoo, alchemy, and astrology. The paradox is that Technical analysis must be more orthodox than the most devout promoter of Fundamental Analysis due to the unforgiving nature of numbers. The markets are so efficient, says Technical Analysis that little is left to be gleaned from Fundamental Analysis.

The danger in relying solely on fundamentals (what the price "should" logically do), is that over confidence in this analysis could result in the justification of losses. Losses must be limited in any form of trading discipline. If a fundamental trader concludes that a stock should appreciate in value because of some fundamental reason (i.e. good earnings), then he might be tempted to let his losses accumulate - especially if the price drops fast while he waits (or "hopes") for the fundamental factors to kick in and affect the market as he expected. This is why it is so important even for fundamental traders to learn how to use a regimented systematic discipline.

Needless to say the two disciplines are not completely unflawed and conversely both have worked successfully to amass great wealth. Consider however the impact of combing the two into a hybrid methodology that in addition to Quantitative pattern recognition, also relied concurrently upon up to the minute Fundamental data. What if the process was automated for you so as to remove the emotional component from trading, and allowing traders to make trades based purely on the mathematics of pattern recognition AND the fundamental merits of the trade?

If these points ring true to you, then you will be happy to know that they are all built into FMS which you can witness first hand via the Daily Forecast Market Software system that is available to you free though email subscription.

Lastly take note that the FMS Daily Forecast subscription is completely free. All we ask is that you not sell the information; otherwise you can use the recommendations however you want. I will leave you with this final warning. Having 70% to 80% accurate forecasts does not make you profit, it is knowing how to act on the information that locks in a profit. Please take some time to review the rest of this site to learn more.    <Previous Topic | Next Topic>