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Fundamental Analysis versus Technical Analysis Trading

By Expert Author: Rob Rens | Article Abstract
Word Count: 301 words | Views: 71 view(s)
Well ideally you want to base your stock picks and investments by looking at both fundamentals and technicals. Because a company with strong fundamentals will typically have a longer term increase in price and performance.

But at the same time, technicals rarely lie. Even with penny and sub-penny stocks, things like resistance, support, relative strength, MACD crossovers, divergance, price channels, cup and handles... etc a lot of times still signal upcoming changes or trends in the price.

With that being said, there are many companies in the penny and sub-penny realm that have very poor fundamentals, yet people can still make a killing by trading the stock based solely on technicals. But like I mentioned, if the company is broke or spiraling out of control, it typically isn't a long-term investment due to the fundamentals of the company. But the chart and/or price may still follow trends or signals regardless of this in the short-term.

So, that is my trading style and how I approaching picking stocks. If I'm just looking for a really short-term trade to make some quick bucks, I could care less about every detail of the company's history, or every SEC filing or what month it may have recently lost money... if the chart and technical indicators show a possibility to make money, it's good enough for me.

But if I'm looking for a stock to hold for 6 months, a year, maybe longer... then fundamentals play a more important role than the technical aspect, as good fundamentals will lead to long term growth and value of the stock (while still following technical patterns).

So it depends a lot on your investing style, whether you want to hold onto stocks, or get into a stock that is signaling it is ready to break out, and sell it a day or two later.
Rob Rens

About the Author/Author Bio

Dave of Hot Penny Stocks, and stock message board.

Article Source: http://www.articlesphere.com/Article/Fundamental-Analysis-versus-Technical-Analysis-Trading/69294

Article Submitted: 2007-01-28 | This Article has been viewed 71 times.

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