Monday, 19 March 2012

Stock Market Analysis: An Amateur's Perspective

For the many years I have been investing, I have tried to analyse the stocks from a number of angles in attempt to achieve some understanding of what is going on.

I originally started from the perspective of Technical Analysis. I bought the books, studied the charts, read the blogs and eventually came to the conclusion that I might as well be studying tea leaves. My initial foray into investing was driven by whatever 'gut feeling' the charts told me and, I discovered, I was particular unsuccessful at it. I realised that my best defence was to ignore my own 'opinions' and to focus on the facts. For a long time I followed the 'Mechanical Investing' forum on the 'Motley Fool' website which seemed to offer a glimmer of hope in that it's mantra that investment decisions should be based upon a calculated response to inputs rather than personal feeling.

Ultimately, I got into designing 'filters' for fundamental data, especially using such sites as Hemscott (now part of MorningStar) and ShareLockHolmes. I still like fundamental data for choosing stocks, however I believe that larger and quicker gains can only be achieved through price-based means (rightly or wrongly). This is how I ended-up being interested in algorithmic trading and this seems to perfectly balance my interest in software with the mental challenges of developing strategies.

As has been dicussed previously in this blog, I have not yet entered the intra-day realm of trading mainly due to a lack of knowledge and time, although not doubt this will come.

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