ANALYSIS AND TRADING Markets generate vast volumes of information: annual and quarterly reports, earnings estimates, corporate insiders’ reports, industry group studies, technology forecasts, weekly, daily, and intra day charts, technical indicators, trading volume, opinions in chat rooms, the never ending discussion circles on the Internet. With so much data, you soon realize your analysis can never be complete. Some traders who have lost money fall into paralysis from analysis.They develop a quaint notion that if they analyze more data, they’ll stop losing and become winners. You can recognize them by their beautiful charts and shelves crammed with stock reports. They will show you indicator signals in the middle of any chart, but when you ask them what they will do at the right edge, they only mumble because they do not trade. Analysts are paid to be right; traders are paid to be profitable. Those are two different goals, calling for different temperaments. Institutions tend to separate traders and analysts into different departments. Private traders have no such luxury. Analysis quickly reaches the point of diminishing returns. The goal is not to be complete but to develop a decision-making process and back it up with money management. You need to develop several analytic screens to reduce a huge volume of market information to a manageable size.
Posted on: Sat, 17 Aug 2013 06:24:22 +0000
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