Behavioral Finance, Technical And Fundamental Analysis Definitions: Ed Seykota, Jerry Parker, Charles Faulkner

by Olivier on August 23, 2009

More great quotes and snippets taken from Michael Covel’s excellent book: ‘Trend Following – Learn to make millions in up or down markets’. I love the brief and straightforward explanations of these omnipresent terms related to trading. Enjoy!

  • Technical Analysis relies upon the idea that smart money will move into a market and give advance warning that a position should be taken. This often occurs when the true major fundamentals are unknown. Jerry Parker
  • While Fundamental Analysis may help you understand how things work, it does not tell you when, or how much. Also, by the time a fundamental case presents, the move may already be over. Ed Seykota
  • The current proliferation of electronic technologies – computers, the Internet, cell phones, 24-hour news, and instant analysis – tend to distract us from the essentially human nature of markets. Greed, hope, fear, and denial, herd behavior, impulsiveness, and impatience with process (‘Are we there yet?’) are still around, and if anything, more intensely so. Few people have absorbed the hard neuroscience research that reasons arrive afterwards. That given the choice between a simple, easy-to-understand explanation that works and a difficult one that doesn’t, people tend to pick the latter. People would rather have any story about a series of price changes happened than that there is no rational reason for it. Confusing hindsight with foresight and complexity with insight are a few more ‘cognitive illusions’ of Behavioral Finance. Charles Faulkner

Few people have absorbed the hard neuroscience research that reasons arrive afterwards. - Charles Faulkner Trading Quotes

Winners take responsibility. Losers place blame.


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