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How to trade the new single stock future Part 4

This chapter is especially important because many stock traders who have come to the SSF market have had training and experience in fundamental analysis only. I reiterate my view that fundamental analysis can be highly effective in determining intermediate and long-term trends, but it has its limitations when used for short-term and day trading. It has been my experience that the typical stock investor is severely deficient in the area of technical analysis, charting methods, trend determination, and market timing | I CHAPTER SEVEN Technical Aspects This chapter is especially important because many stock traders who have come to the SSF market have had training and experience in fundamental analysis only. I reiterate my view that fundamental analysis can be highly effective in determining intermediate and long-term trends but it has its limitations when used for short-term and day trading. It has been my experience that the typical stock investor is severely deficient in the area of technical analysis charting methods trend determination and market timing. The prevailing opinion that none of these skills are especially important for the investor is not valid. Stock market behavior throughout the world has become highly volatile since the mid-1980s. We live in troubled times and violence is a way of life in several key areas of the world. Threats and acts of terrorism are daily events and economic stability in many countries is threatened by effete or dysfunctional political systems. Uncertainty and volatility are rampant not only in futures but in stocks currency relationships and government policies. Virtually every day brings new concerns and challenges. Furthermore investors and traders have been blessed with access to a plethora of information virtually all of which is available 63 64 How to Trade the New Single Stock Futures instantly via the Internet business television fax and telephone. Stocks rise and fall sharply in reaction to news. Has this been a blessing or a curse Investors and traders have been blessed with the ability to place orders electronically that are filled within seconds. Brokers compete for customers by offering faster execution of trades more information about the markets opinions research recommendations and stock analyses all available at no additional charge. Some brokerage houses offer ten commission-free trades to new clients. The emphasis on speed of order execution encourages traders to act and react quickly. It invites traders to trade .