A reader asked if I would define if I’m a Technical or Fundamental type trader.  Somewhere in this blog I have indicated my particular trading style, but probably not in one post. So, here is a straight forward synopsis of said style:

I use a combination of both.

On the technical side, I keep it very simple: MACD, RSI and OBV using various time frames.  (Occasionally, I will look a few more indicators: money flow, ADX, Bollinger bands etc.)  I think there is a strong tendency by most technical type traders to use more indicators than necessary.   As far as I’m concerned, technical studies are just one more tool to try and shift the balance in your favor.

Fundamentally, I look at the financial statements placing strong consideration on those companies that on paper appear financially sound. (I.e, decent cash, manageable Debt, receivables and inventory in line  etc.)  Investor’s Business Daily does an admirable job rating financial health and is a good place to screen for potential candidates.  (But it isn’t the holy grail, I’m still on a quest for it.)  Furthermore, I like to see solid institutional support along with a decent percentage of insider ownership.  And, to encourage future demand, a relatively low number of shares outstanding.

As far a trading breakouts, if I perceive an opportunity, I will not hesitate to take that type of trade.  The same applies to momentum trading.  For the most part, with either of these methods you don’t have enough time to conduct proper due diligence which gives me an uneasy feeling.  Mostly, I’ll just look to make a very quick trade and get back to following just a few stocks.  To wit, these plays are always small with hard stops and predefined price goals.  I do trade full time, so I have to consider scalping opportunities to supplement income while I’m managing or building positions in other equities.

If I had to classify my trading style, and I don’t really like to,  I fit more in the swing trading category.   I find regular tick-by-tick/daytrading to be tremendously stressful, and emotions, at least for me, cloud trading decisions more frequently which is never a good thing.

Your style will ultimately come out of your own trading experiences.  I just put a brief, generalized page out for clarification and more importantly, to assist anyone who may be in the process of developing one.  Make no mistake about it, it is a process and you should anticipate a lifetime for it to evolve.

I appreciate the comments,

CC