Trading Strategies Essay Example for Free

Trading Strategies Essay Gone are the days when purely the corporation’s fundamentals are being studied before someone invests in the stock market. The traditional way of studying corporations is to look at their earnings, assets, liabilities, etc. A fundamentally sound company is an ideal company to invest in. Today, the fundamentals of any company are still considered; in fact, most investors (especially the medium- to long-term traders) consider the fundamentals of a company as a prerequisite to any investment that they are going to execute. The fundamentals of a company tell an investor if his or her investment will be safe in the long run even if there would be minor bumps in the stock market (volatility of prices, for example). Investing in a company with sound fundamentals ensures the investor that any minor price fluctuations can be ignored as long as a long-term horizon is the perspective of the investor. Thus, even if the price of a certain stock drops, an investor would not easily pullout his or her investments because he or she believes in the company. In essence, he is an investor more than being a trader.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   But it is indeed correct that fundamentalists need market technicians. Technical analysis is about charts, trends, and market behavior or psychology. It is in this study that an ideal time to enter into an investment (or to sellout your shares) can be established scientifically. A classic example of how technical analysts may help an investor is by considering the case of the recent US subprime woes. Even fundamentally sound companies in the stock market are affected by this market decline. A fundamentalist, hence, the long-term investor, has a little concern on this because he know that the company he is investing on is safe and will rebound in the long run. However, a technical analysis of prices during this period would dictate that an investor should have sold his or her shares and buy back as soon as the market goes on the uptrend mode.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   I agree that both fundamentalists and market technicians need each other for them to maximize their earning opportunities.