Moneycontrol
YOU ARE HERE > Moneycontrol > Technicals > Glossary

Technicals

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Trading philosophies

There seem to be three major and well defined trading philosophies; contrary opinion, fundamental analysis and technical analysis. It further appears that although each commodities author may claim to have strongly adopted one of philosophies that most seem to practice combinations of each.

Contrary Opinion: Contrary opinion was first prominently set forth by Neill Humphrey in The Art of Contrary Thinking. Several other texts are also included in the References section. Very simply put, contrary opinion is practiced at market tops and bottoms. It relies heavily on the belief that most traders will be wrongly investing to continue the current trend immediately before a reversal occurs.

Fundamental: A fundamentalist strongly believes that the perception of supply and demand sets the price and direction of market prices. Consistent with this belief, the fundamentalist researches information on inventories, changes in the nature of the consuming market, factors affecting manufacture and delivery, rumors which might affect what other traders currently believe about the condition of supply and demand and a multitude of other data and factors. Fundamental factors vary with commoditiesgrains are affected by weather conditions, current and forecasted, and by government reports; currencies are affected by interest rates and where they are trending, and political conditions. You can see that aggressive fundamental trading requires a great deal of study.

Technical: The pure technical trader relies strictly on price information. This trader would strongly believe that all of the fundamental factors are either already integrated into or are being signaled by the current price patterns. Because of this, the major tool of the technical trader is the price chart; the bar, the candlestick and the Point and Figure Charts.

Other Sections
Sections
Follow us on
Available On
PCI DSS Compliant