Considering the average trader, advisor, and investor has a slew of information to sift through on a daily basis, one of the key components is to have the capability of understanding the concept of usable information versus bits of useless data. The most dynamic aspects to any trading day or week for any professional or part time market participants is spending the time to isolate elements of news, data, and social media based information that can be readily applied to any trading methodology. Many times, the time spent on this necessary analysis can lead to confusion and dismay as sources of information can carry a certain level of bias, opinions of market direction, and contradictory commentary.
Our stance on information, data, and social media based information revolves around certain basic principles:
1) Conduct a substantial amount of due diligence in discovering the fundamental and technical analysis for specific stocks and more macro indices and indicators
2) Understand the daily and weekly analyst opinions and statements as they relate to volatility and price action
3) Monitor how the perception of macro markets changes over time as it coincides with geo-political and economic conditions, this includes currencies, commodities, and futures
4) Understand the implication of how derivative based activity influences price action and tone of the markets and specific equities during earnings season
5) Maintain a watchful eye on specific and aggregated company filings and insider transactions
6) Acknowledge that most of social media based information, not excluding Twitter, Facebook, LinkedIn, Blogs, and various digital publications, carry a significant degree of Sinicism and to some degree directional bias
7) Price action, volatility, and volume tend to coincide in order to make a directional move more meaningful in a particular equity, derivative, and index.
8) More often than not, the above 7 principles are not random events and longer horizons prove the concept of the mosaic theory and its use by experienced market participants.
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