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Why technical analysis is always a better option than fundamental analysis?

Welcome to the advanced Elliot Wave Education channel “Elliott Kumar”.

Every single person enters the financial market is to generate money. Any challenge to this statement? I don’t think that there is any other reason for anybody to be in Financial Markets. If everything is so far good, then let’s move ahead.

There are only two approaches with which a trader or an investor can generate money. Those are:

1. Technical analysis

2. Fundamental analysis.

Let me give a little definition of both terms.

Technical analysis is the way to forecast the stocks or commodities based on Price Action data. On a graph, there is price data as related to time. An analyst read that information as data and then decodes it based on his experience, theories, and principles to forecast the price.

Fundamental analysis is also the way to forecast the financial markets but based on the data of the fundamental of the companies. That is, data of the earnings of the company, P E ratio, C E O speeches, news of the company. Here also, that data is just information. Analysation is a process in which a trader or an investor decodes the data.

Now, let’s come to the topic that why Technical analysis is the better approach.

1. Data.

In technical analysis, the data we need is just the price and volume. We can always have that free data from the broker and a few financial websites also. The accuracy of that data is no doubt 100%. A trader analyzes the data based on your theories, principles, or strategies.

But in fundamental analysis, the data you are getting for free is not enough. I have seen people talking about Warren Buffet that he is the richest man on Earth and he is a fundamentalist. Of course, he is the richest, but he is not using the same data you are using. Remember, in companies, Mr. Buffet is invested, those companies send every valuable information he needs to analyze.

Also, Mr. Buffet gives their views to the companies that what changes they should make to be more profitable.

Plus, the news we are watching, can we rely on that to invest. Try it, and if you will become successful, ping me, please.

How news plays a vital role to fool the retailer, I have made another video on it. The link is in the description.

Also, the earning sheets we are looking for a company, I don’t even rely on that as we all know the level of corruption. Rich people can manipulate fundamental data. there are a lot of examples that I can't discuss here.

So, maybe this point is clear that the data we need to analyze is not enough. On the other hand, the free price action data we have is 100% reliable.

2. What makes us profitable?

My question is that on what basis we are going to get the profits? On the profit of the company or the increase of the price of shares?

Let’s say an XYZ company is earning well. And you had forecast that it is going to earn more in next 2 years. Your analysis become true and the company earned so well. Will you get the part of your profit?

If this could happen I would love to spend my money on the paid fundamental data and learn how to analyze that data but it is not true my friend. The profit we are going to make will only come if the share of the price will increase.

Do the share of the price simultaneously increases with the earnings of the company? If you think so, please comment with the facts.

A trader or investor will get the profit only if the price of the share will increase.

So once again, the technical approach seems better than the fundamental.

Am I saying that fundamental analysts don’t make money? No, What I am trying to explain is the complexity of a fundamentalist.

3. Time frame

With the fundamentals, you cannot take a trade of less than at least 2 years. No company fundamentals change within a week or two. It takes time.

I have seen a lot of traders doing trade on fundamentals and they are intraday traders or positional traders.

Few of them are news-based traders. When bad news comes, they short, when good news comes, they do long. Is it really that easy? If you have consistently earned money by listening to the news, please reach me.

News-based trading is very risky and an understanding of mass psychology is needed to put an edge on news-based training.

In technicals, you can do even intraday trades. But I never suggest any trader do intra. I have made another video on why we should stay away from intraday trading, as even if you are earning good in intra, there are a lot of other pros and cons. The control of the emotions is much needed in intraday trading.

Also, I believe that an intraday player can earn money, but not as much as swing or positional trading.

4. The perfect roadmap

There is obviously one advantage of the fundamentals because of which everyone is fantasizing about it. That is long-term Investing.

The longer view an investor has in a financial market, the more are the chances to win. As in a long run, most of the companies give profits. But beware, because not all the companies give profit in long run.

If you believe that most of the companies give profit in long run, and you spend a little time with the fundamentals to analyze that which stocks are going up for the next 5 years. You chose one. It gave you 80% profit, but there are companies which went 500% in 5 years.

To catch the maximum percent, one should have a good amount and quality of data and an understanding to analyze it.

The good thing about technical analysis is that we can play long-term moves in technicals also which most people don’t know. There are the theories and principles of the stock market such as Elliott Waves which gives you the roadmap of the long term as long as the previous data is available. And with those principles, you will have the ability to choose the companies which are about to give the best results and greater profits.

Also, fundamentalist like Warren Buffet has the caliber to choose those companies, but as I said it is difficult for a retailer to spend a lot of money on the data Warren Buffet have. It is quite impossible to have meetings with the C E O’s of those companies.

5. The footsteps of big money.

Last but not least, of course, the big hedge funds and mutual fund companies work on the fundamentals. As I said, they have such kind of information that a retailer can’t have. So, on what basis technical is playing?

A technical analyst is decoding the path of the big money and predicts what the smart money is thinking, and what they are going to do. But technical analysis is not just about following the footsteps of those big whales. It is way more than that.

Here I covered the five aspects that why technical is a better approach. but remember, the fundamental analysis is also in itself is a big education.

A little approach to technical analysis:

The price we are seeing on our screen is actually the impression of the human mind of all the participants of the market, involving the hedge funds, mutual funds, rich businessmen, and also retailers.

I will soon make a video on what is technical analysis? How mass psychology is related to technical analysis? What is the right way to use technical analysis?

Till then, please observe the market and justify my views. A lot of information is based on technical and fundaments you can get on the internet but remember, you always have a beam scale with you. That is, The Market.

Note: Moving crossover, a blast of Bollinger band, and strategies like this I don’t call them technical analysis. What I am talking about is reading the psychology of money. Hope we will interact later. Have a nice trade.