- The nine errors that account for most technical losses, with the fix for each
- How technical and fundamental analysis answer different questions
- A combined process for deciding what to own and when
The nine errors
- Analysis without risk controlWhat it looks like: A perfect read and a position size that can't survive being wrongThe fix: Size from the stop, every time. Analysis quality has a ceiling; sizing errors don't.
- Ignoring regimeWhat it looks like: Taking beautiful setups into a falling marketThe fix: Regime check before the chart, not after
- Timeframe mixingWhat it looks like: A weekly thesis exited on an hourly wobbleThe fix: Higher frame permits, lower frame times — and never the reverse
- Indicator stackingWhat it looks like: Six correlated lines, one of which always agrees with youThe fix: One trend measure, one volatility measure, price
- Trading the shape, not the situationWhat it looks like: A flag with rising volume taken as a flagThe fix: State the supply-and-demand story the pattern requires; check volume agrees
- Chasing extensionWhat it looks like: Buying a breakout four days and 9% lateThe fix: An extended setup is an expired setup — the risk that justified it is gone
- Widening stopsWhat it looks like: "It's just a shakeout" at the moment of maximum discomfortThe fix: Tighten only. Needing to widen means the size was wrong at entry.
- Averaging down a tradeWhat it looks like: Adding to a loser to improve the averageThe fix: Never in a trade. It converts defined risk into undefined risk.
- No written recordWhat it looks like: Confidence in an edge that has never been measuredThe fix: Log every trade before the outcome; sort monthly
Notice how few of these are analytical. Six of the nine are behavioural or procedural — which matches what the trade records in the journal lesson consistently show: deviation from plan is the largest single identifiable cost.
The two lenses answer different questions
- Question answeredFundamental analysis: What is worth owningTechnical analysis: When, and at what risk
- InputFundamental analysis: Financial statements, business economicsTechnical analysis: Price, volume, structure
- HorizonFundamental analysis: YearsTechnical analysis: Weeks to months
- StrengthFundamental analysis: Identifies durable businesses and dangerous onesTechnical analysis: Defines invalidation and timing precisely
- Blind spotFundamental analysis: Can be early by years; says nothing about entry riskTechnical analysis: Says nothing about whether the business survives
- Failure modeFundamental analysis: Value traps — cheap and getting cheaperTechnical analysis: Perfect chart, hollow business
Fundamental quality against technical stage. The interesting cells are the two where the lenses disagree.
- Strong business · Stage 2
- the primary hunting ground
- Strong business · Stage 4
- watchlist — wait for stage 1
- Weak business · Stage 2
- tradeable, not investable — tight risk
- Weak business · Stage 4
- nothing here
A combined process
- 1Regime first. Is the market environment constructive? If not, reduce size or stand aside regardless of everything below.
- 2Fundamental screen for quality. Cash conversion, returns on capital, leverage, forensic flags — the kill checks from the fundamentals course.
- 3Stage filter. Discard everything in stage 4 and be sceptical of stage 3, however good the business looks.
- 4Relative strength. Among what remains, prefer what capital is already choosing.
- 5Structure for entry. A base, a spring, a pullback in trend — something that gives a defined, close invalidation.
- 6Size from the stop. Fixed percentage risk, adjusted for volatility.
- 7Write both theses down. One sentence on the business, one on the structure — and the specific event that would falsify each.
Disagreement is information, not a problem to resolve by picking a favourite. A deteriorating chart on a business whose reported numbers still look excellent is a common configuration and is worth taking seriously — price frequently reflects information before it reaches the financial statements.
The practical resolution is asymmetric: let the technical read govern the timing and the risk, and let the fundamental read govern whether the name deserves to be on your list at all. A strong business with a broken chart goes to the watchlist, not the portfolio.
This is the most expensive way the two disciplines get combined. A position is entered on a technical setup with a defined stop. The stop is hit. Rather than exiting, the participant switches frameworks: "the fundamentals are still intact, so I'll hold it as a long-term investment."
The trade has now become an investment purely because it lost money, and it has no invalidation at all. Decide which framework governs a position before you enter it, and do not switch afterwards. If you genuinely want to own it for years, size it and enter it that way from the start — with the drawdown tolerance that implies.
- ☐Check the regime before looking at any individual chart.
- ☐Size every position from its stop, at a fixed risk percentage.
- ☐Never widen a stop; never average down a trade.
- ☐Write the thesis and its invalidation before entering.
- ☐Log every trade and sort the record monthly by setup type and regime.
- ☐Decide before entry which framework governs the position — and don't switch.
- ☐Judge yourself on process adherence until you have a hundred trades to judge outcomes on.
See it live · This site runs both engines side by side — the fundamental score and the technical stage, base and breakout analysis — so the two lenses can be checked against each other on the same stock.
See both reads →In one screen
- 1Six of the nine common errors are behavioural or procedural, not analytical.
- 2Fundamentals answer what to own; technicals answer when and at what risk.
- 3A strong business in stage 4 belongs on a watchlist, not in a portfolio.
- 4Let the technical read govern timing and risk, the fundamental read govern candidacy.
- 5Decide which framework governs a position before entry, and never switch after a loss.
Check yourself
Nothing is scored or stored — the explanation after each answer is the point.
A high-quality business by every fundamental measure is in stage 4, down 55% from its high. What does the combined framework suggest?
You entered on a technical setup, the stop was hit, and you decide to hold because the fundamentals are unchanged. What has happened?