[This is part of the series: Technical Analysis > Fundamental Analysis]
Why do I prefer technical analysis (some technical analysis, anyway) over fundamental analysis?
Part of it has to do with the fact it is hard to know if you are right, wrong, or lucky.
Part is that technical trading is just easier.
In trading, fundamental analysis is hard because there are so many moving parts.
Want to know if stock X, bond Y, or commodity Z is going up or down over the next year?
For that answer, we need to know what influences prices.
Take cotton for example.
Sifting through the fundamental research is a tall order for anyone that is not a cotton specialist:
- What is current production, both nationally and worldwide?
- What is current consumption, both nationally and worldwide?
- What stocks are currently in storage, both nationally and worldwide?
- What are the expectations for stocks at year-end?
- What potential trade laws can influence prices, and by how much?
- How will changes in exchange rates influence prices, and by how much?
- What influence do energy prices have, or should we even worry about that?
- How can inflation, or inflation expectations, change my bottom line?
- What is the price of alternatives, and how can I quantify them into my prediction?
What if you are looking to trade 10 – 14 different futures contracts like I do?
That’s my point.
With fundamental analysis, there are too many moving parts for most people.
Stop trying to do too much.