Asked by Anonymous

How important is it to learn technical analysis for investing?

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  • Junus Eu
    Junus Eu
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 12 Mar 2019

    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.

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  • Zann Chua
    Zann Chua
    Level 6. Master
    Answered on 15 Mar 2019

    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 !

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  • Shawn Chen Tdr
    Shawn Chen Tdr
    Level 1. Freshie
    Answered on 15 Mar 2019

    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

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  • Yeo Enk Loui
    Yeo Enk Loui
    Top Contributor

    Top Contributor (Apr)

    Level 6. Master
    Answered on 12 Mar 2019

    Totally agree with what Kah Hwee has mentioned... it is more important, as a beginner to understand the fundamentals of a company instead of learning technical analysis at the start. It is also very mentally tedious to learn both simultaneously and its better to have a good grasp of fundamentals before incorporating technical analysis to optimise your investing by timing market entries and exits.

    In my own experience though, I started with technical analysis because I'm someone who doesn't mind spending 10.30pm - 2.00am at night looking at the US stock market (10.30pm in SG is 9.30am in New York) and I find that to be more fun.

    In retrospect though, if there is anything that I would change is that perhaps I would devote more time into learning more about fundamentals so that I can have a more holistic and complete view of how the company is performing, instead of purely depending solely on technical analysis to make decisions.

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  • Isaac Chan
    Isaac Chan, Business at NUS
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 12 Mar 2019

    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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    • Joel Pang
      Could you explain what are some fundamental investing principles?
      13 Mar 2019
  • Yong Kah Hwee
    Yong Kah Hwee
    Level 6. Master
    Answered on 12 Mar 2019

    If you are a beginner like me, it is better to analyse the fundamentals of companies instead.

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  • Terence Tan
    Terence Tan, Finance at Singapore Management University
    Level 3. Wonderkid
    Answered on 12 Mar 2019

    For fundamental investors like me, I will say it is not important.

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