I’m a complete beginner in the investing world. I assume the best place to begin is with fundamental analysis; however, I’ve found traders stating that fundamental analysis does not work, while other say it’s essential. As well, the amount of information to be digested is frightening for a novice. Considering the above, I have two questions:

  1. Is there a roadmap of subjects to be learned in order to facilitate the grasping of all the information?

     2. What do I do to correlate technical analysis with fundamental analysis?

       Felipe from Basicville


Felipe, as a beginner you are asking the right question at the right time in your learning curve. Good start!

The “road map” you seek begins with the terminology, which is financial in nature, primarily. Learn how to read the SEC financial reports and the quarterly/year-end statements. This is the beginning. After this, learn to define other markets that influence your chosen market. For example, Microsoft and Intel have an affective relationship (software and microchips). Once you understand the market relationships, you can better analyze the market you want to trade. Then define and follow quality news sources or analysts that track the sector, or the market itself. Finally, learn how to get in on conference calls, or read the transcripts. One can learn much from what the CEO or CFO has to say, and how he or she says it. Fundamentally (pun intended), this is the road map. Bottom line? Learning everything you can about your market is good.

It is true that traders disagree about which is the better approach to analyzing markets, technical or fundamental analysis. Pure technical analysts look at chart patterns and care little about fundamentals. Pure fundamentalists care little for charts and patterns. Then there are those, such as myself, who think that good trading is about knowing all you can know about where you invest your money. For me it depends on the length of my investment. Short term (1-4 days), I find technical analysis tools quite useful, and I use them. Longer term (months or years), I go to fundamental analysis for both entry and exit. This is how I correlate the approaches to analysis.

Finally, never be afraid of what you need to do to achieve success. Fear will only inhibit your progress. Instead, embrace the wonder of learning and get excited about where you might end up if you do your work and learn the craft of trading. That place is the art of trading. This, my friend, is the place where success resides and fun is had.

Trade in the day; invest in your life …

Trader Ed