Last update: August 2021

A charting purist is a disciple of technical analysis in word, thought, and deed. He practices monotheism, with price action as his god. Far from being restrictive and confining, following price is liberating. It leaves the worshipper unshackled from indecision and information overload. His is a simple life of single-variable analysis.

Some traders are born in the field of technical analysis and never depart. Their methods are untainted by the news and fundamental analysis. It’s not that such alternatives are useless or unworthy. Rather, they are already taken into account. Price is the lens by which both are assessed.

Does news matter? Do fundamentals (like earnings, sales, and debt) influence a stock’s destiny?

Of course, but only to the extent that they impact price. If it doesn’t influence price, then it doesn’t matter. If it does, then the chart follower will see it and react accordingly.

How do you know if you’re a charting purist?

You view news as noise and fundamentals as superfluous.

Pros & Cons, Give me a List

Just so there’s nothing lost in translation, allow me to list out the pros and cons of using technical analysis:

Pros of using technical analysis

• It’s simple and straightforward.
• It’s a time saver.
• It’s all-encompassing and reflects everything that ultimately matters to a company.

Cons of using technical analysis

• It requires practice to master (this is not unique! every form of analysis does)
• Charts can be messy and generate false signals (again…this is not unique!)
• You might miss out on information that is shown in fundamental data before it is discounted by price (I don’t really believe this…)

If you would like an easy-to-follow field guide for how the charting purist analyzes stocks, I suggest spending some time with the June edition of the Trading Justice Newsletter. It’s titled The Art of Charting and covers everything I think is essential. If that doesn’t sate your curiosity, then move along and start watching the Technical Analysis 101 video series.

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