My ‘lightbulb’ trading moment…
Have you ever read Sun Tzu’s, The Art of War?
If you haven’t, I really suggest you get round to reading a few chapters at least, as even though it’s very philosophical, it’s also very direct in terms of the information you can get out of it.
That’s a slight paradox I guess, but that’s why it’s such an acclaimed book.
If you haven’t read it, here’s a particularly famous quote from chapter five…
“The rush of water, to the point of tossing rocks about. This is shih.
The strike of a hawk, at the killing snap. This is the node.
Therefore, one skilled at battle –
His shih is steep.
His node is short.
Shih is like drawing the crossbow.
The node is like pulling the trigger.”
It’s essentially saying that when two things come together, an energy is released.
In trading terms, I believe this is fundamental analysis combined with technical analysis.
I was actually talking with a friend who has been a trader for many, many years (he started before I was born) a few weeks ago about this…
He’s always believed that fundamentals are the drivers of trends, while technicals and price action is how you execute your trade.
I agree, but I don’t think I’m as explicit as I should be with how I look at fundamentals. This is something I myself in my own trading need to improve on.
The reasoning for his belief is this…
Banks and hedge funds are able to glean information to position themselves correctly by looking at flow, as well as having access to deeper information and statistics. But they also look heavily at what the main economic drivers are and are always asking “Where does the money want to go in one week, one month, one quarter or one year?”
For me that is a killer question and honestly, I have no idea why I haven’t asked it myself.
Yes I study fundamentals, but this turned a light bulb on in my head.
So, from now on, I’m going to write a quarterly report and update it if anything major changes. By ‘major’ I mean anything I deem worthy to change the overall trend of an asset.
This may include some technical analysis too, but I think that if we have a blueprint together as to where capital looks to be flowing on a longer timeframe based on economic reasoning, this could add to our cumulative edge.
I’ll be sharing it with my Trading Point Pro members once done.
If you want me to be sending it to you too, simply click here to join Trading Point Pro today.