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Anonymous

07 Jun 2019

General Investing

How important is it to learn technical analysis for investing?

Discussion (8)

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Isaac Chan

07 Jun 2019

Business at NUS

I would say play to your strengths and see what works best for you. What might work for someone might not work for you.

Maybe you can try both fundamental and techincal investing in the long term? If you want to try a new strategy you can use stock simulators and see if your analysis is right after all. This might be a much smoother way to transition.

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Hello!

If you are a beginner i think that it would be better to start from the basics and understand about the fundamentals of the company instead of jumping into technical analysis. After familiarising yourself with it, then learning technical analysis would be good !

Learning TA for investing is very important. Personally speaking, it is an even more important than FA. Generally speaking, it is also less complex and easier to make a decent decision purely on TA alone.

Price mostly leaves footprints via chart patterns, whereas FA can be 'subjective' at times. A good company can enter a lousy FA period, or an inherently flawed company can display strong FA numbers/data. Also, there are common traps such as creative accounting techniques and dishonest auditing to lure investors.

TA is both time-sensitive and price-sensitive. It is also more flexible in the tailoring strategy for investing across different timeframes (3 months, 6 months, 1 year

For starters, it's always a good idea to read up on basics so that you know when someone is smoking you.

But jokes aside, I do agree that it would be a good idea to fully understand the business fundamentals from a value investors perspective and then complementing it with a technical analysis perspective. There are people who are strong proponents of technical analysis (I once worked for a billionaire investor who was a huge advocate of charting, and believed that everything you need to know is in the price chart itself). Yet, we also did company analysis reports which delved into the business fundamentals ie. Business model, financial profitability, operating leverage and ability to enjoy economies of scale, cash conversion cycle etc.

Likewise for guys who are more into Technical Analysis (TA), it doesn't hurt to learn more about the business you are planning to invest in.

Totally agree with what Kah Hwee has mentioned... it is more important, as a beginner to understand ...

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