The biggest and clearest advantage and disadvantage of using Financial Economic Analysis in financial market WITHOUT taking price trend direction into consideration is one can "overstay" the position when the trend direction changes.
When one draw a conclusion from the analysis and coincidentally in synch with the price trend, confidence builds up. As price continue to rise, OVER-CONFIDENCE takes over.
The problem starts when the price trend has changed BUT the "investor" remain unaware the majority poll has changed to new different direction.
This is what happen when anyone coming into the market does not have a game plan or system to track and follow the price trend directional change.
By the time the "investor" realize, price changed significantly and too late to act upon.
The other scenario is the Financial Economic Analysis and the price trend direction are OPPOSITE.
The "analyst" will come up with terms to justify their opinions. In an uptrend, the analyst expect the market to retreat/drop BUT facing a "stubborn" situation where price continue to scale higher will use words like over-valued, over-bought, over-priced to deny and admit MARKET is right all the time and our opinions are not.
In a downtrend, analysts believe the price should be higher despite the continuous decline will use words like, under-valued, over-sold and under-priced to deny again their opinions are IRRELEVANT to the market while trying to call the market what to do. Market trend continue to fall to its own final bottom before the trend reverse!
MARKET IS DEAF TO US !
Some will even take the trouble to publish, repeat/spam that the INSIDERS are doing this and that.
Again I sincerely and honestly believe that the ONE and ONLY way to exploit the market successfully and consistently is to
LISTEN TO THE MARKET and ACCEPT what the market is doing and telling us.
It is even better for us to completely "discharge" our opinions and look at the market.
When one try to FORCE an opinion on the market especially when the market trend direction CONTRADICTS us, our ego become even bigger upgrading into DENIAL mode BIG TIME. This is the most dangerous phase that most of the time results in FINANCIAL calamity.
Incorporating a system that can warn us the price trend change should help us manage the problem.
From my own experience 99.9% of the so-called "fundamental investor" will not consider and incorporate some sort of trend system into the consideration
More likely they will remain blind and chose to be blind while the mind is CLOSED
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