The Traders Journal

One + One = Three/Analogue + Digital/ Fundamentals + Technicals


                                                                 If there’s a better way, take it.
                                                                If there’s a bar, raise it.
                                                               If there’s a methodology, stake it.
                                                              If there’s a dream, chase it. 

                                                 (paraphrased from an Acura advertisement)

I met a digital trader on the streetcar last month in Toronto.  I’ll call him Digital Dan because he writes code for a hedge fund house that trades the markets based on algorithms written by computer nerds.  After talking with Dan, I discovered that, for the most part, these nerds have no idea what it is they are trading.  Dan told me that when the volume occasionally spikes, he and the other programmers might stop and ask out of curiosity some specifics about the particular ticker symbol.

I’m a hands-on trader (unlike Digital Dan).  I know exactly what I am trading.  I stayed calm.  I have years of experience controlling certain behavioral inclinations, but Dan’s comments required some extra “investor self” discipline.  If he’s a 100% digital trader, I’m an analogue trader with a digital eye.  

To use an automobile metaphor, I’ve owned cars where the transmission is manual with no stability control or anti-lock brakes, and the acceleration is mind-blowing.  It requires skill, nerve and finely tuned judgment to safely drive a car like that.  Only an analogue driver could handle something so raw, real and fast.  After that, a modern sports car is a piece of cake. 

Can you imagine Digital Dan trying to drive one of my analogue cars?  You get my point.  The stock market is similar.  I would wager serious amounts of my own money if you put Digital Dan in the trading ring with Analogue Gatis.  I’d bet you that I would kick his derriere!

I maintain that if you try to live exclusively in the digital domain, you’ll die a digital death.  Cultivating your analogue skills and blending them with digital tools yields the most profitable results.  Hence the title:  One + One = Three.  Not unlike rational analysis which likewise blends fundamentals with technicals and therefore adds both consistency and growth to your bottom line.  Similarly matching the investor to the most appropriate methodology or bringing together a balanced buying strategy with a compatible selling strategy are other examples.  As in so many realms, the right blend of mixed inputs significantly enhances the end result.

I’ve included one of the graphics from our new book, TENSILE TRADING: The 10 Essential Stages of Stock Market Mastery.

 It clearly illustrates that as we investors grow and progress through the predictable five levels of competency, our investing tool kits become more complex and we are able to incorporate and distill information from multiple arenas .  This blending is what leads us to finally achieve the EXPERT level.

Trade well; trade with discipline!
- Gatis Roze, MBA, CMT

Gatis Roze
About the author: , MBA, CMT, is a veteran full-time stock market investor who has traded his own account since 1989 unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a past president of the Technical Securities Analysts Association (TSAA), and is a Chartered Market Technician (CMT). After several successful entrepreneurial business ventures, Gatis retired in his early 40s to focus on investing in the financial markets. With consistent success as a stock market trader, he began teaching investments at the post-college level in 2000 and continues to do so today. Learn More
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