Choosing the right analysis methods

We have 4 predominant approaches to market analysis:
1. Common sense: Choosing the right blend of assets in the first place, buy with discount, not getting greedy, see where the market is going.
2. Psychological: Seasonality, Elliot waves, support/resistance, dead cat bounce, retail investor behavior, algorithmic slippage.
3. Fundamental: Accounting ratios, long term indicators and polls, debts and yields, analysis of regulatory moves.
4. Technical: Bollinger bands, MACD, Stochastic RSI, doji patterns etc.
All these methods are not fully objective, influence each other and provide multiple conflicting indicators at each time scale and asset within asset class scale.

First of all, it would be unwise to ignore any indicator, but equally unwise to react to every indicator.
Therefore for each trade we define ~5 dominant indicators at entrance and at exit, but also we “rebalance” relevance of indicators each time we analyze the market.
Short-term local indicators are good for selecting timing and picking an asset, but longer more global analysis sets the tone for choosing the trade in the first place.

Being statisticians we trust fundamental analysis more than other sorts of analysis since it supplies fewer false signals.
Long-term technical indicators are generally more stable and accurate than short-term indicators and validate/invalidate accuracy of fundamental analysis.
Short-term technical indicators are used to check timing and change of trends.
Psychological indicators may be used to explain the short-term technical indicators.
“Pulling the trigger” one way or another is always based on common sense.

The common question is always: did I get the trend right, or are we witnessing manifistation of a new trend?
Leading vs lagging indicators, news announcement etc help only to some extent.
Any decision has a statistical possibility of failure, and should be bound by proper diversification and time scale selection.
There is a common sense rule: in case of doubt reduce your bet [rebalance], if the certainty increases double your bet [shorter time scale leveraged assets].
In any case, the technical analysis is a semi-objective baseline for more disciplined trading and rebalancing.

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