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When I started trading about 7 years ago by opening a trading account, the first I did was read as many books on trading as possible. It took me a while, and speedreading might have come handy if I had thought about it. Anyways, the first thing I had noticed that was very clear to me back then was that there were basically 2 ways to profit from the stock market: technical analysis and fundamental analysis.

If you have been in the trading scene long enough, you are probably aware of them. Technical analysis makes use of graphs, indicators, mathematical formulas and quantitative trading to predict trends, whereas fundamental analysis makes use of news and psychology of trading to predict stock trends. There is obviously more to it than just a few sentences but these are the general ideas.

In almost every book I read on one subject or another, the author was always criticizing the other method and explaining why his or her method was better. People on the technical side would argue that news effects are included already in the charts and the prices and there was no reason to analyze it separately; people on the fundamental side would argue that news is what makes the graphs and anticipating the movements before it was reflected in the graphs was the key to making money in stocks.

What amazes me is that 7 years later, when I browse trading forums such as EliteTrader, there are still the same on going arguments about which technique is better. Some so called ‘professionals who trade for a living’ are spending their time arguing like little kids on forums to prove that they are right and the other one is wrong. What’s even worse is that it’s always the same old arguments that are used now, and that were used in the books I read 7 years ago, and that will probably still be used in the future by people who have nothing better to do than argue on forums.

For me, this debate is very simple, just use both. Simple as that. Why? Because both work! I don’t understand how someone can call himself a professional in a field by totally ignoring one big chunk of a field. It’s like a computer professional who says he knows everything about computers except he doesn’t care about computer hardware but simply masters software and programming, or vice-versa. It’s okay to be great one side of a field, but one should still have a good amount of knowledge and recognize the other. In trading, you might be an expert technical trader creating and testing hundreds of trading systems, but you must also acknowledge that there is serious potential from someone who analyzes fundamental analysis. How many times have we heard on television, “This company just made this major announcement and the stock moved of whatever percent.”

Having the knowledge of both sides gives you twice the amount of opportunities to make money and at the end, you are just a better trader.