Tradeguider Blog

Empowering you to trade alongside the smart money through proven and pedigree methods and expert guidance that is with you all the way

Do you Need Fundamental Analysis if you Use Wyckoff VSA?

Posted by Tradeguider Team on Wednesday, August 25, 2021
Tradeguider Team

If the charts don’t lie and all you need to focus on is them, implementing the Wyckoff VSA approach, and keeping your mindset solid, then why would you even need to consider fundamental analysis? Read on for an answer.


The nature of chart analysis-led trading

Chart analysis includes approaches like Wyckoff VSA which looks for the footprint of the professional traders – the market makers, the hedge funds, the banks, the proprietary firms – in the way volume, price and spread interact.

This enables the user to avoid being wrongfooted by them and  make money by following in their footsteps.

Chart analysis also includes technical analysis methods where mathematical formulae are used to predict future performance from previous performance.  This gives guidance as to when to enter or exit a trade.

Either school is focused on the idea that everything you need to know about the asset is incorporated in the chart. Given that these methods take time to learn, why even consider fundamental analysis?


What is fundamental analysis?

For the purposes of this article, we are using the term fundamental analysis to mean not just analysis of balance sheets but staying aware of big-picture political and social developments, as well as the macro-economic factors associated with your target company or commodity and looking at dynamics hitting the sector, country or region as a whole.

If you delve deeply into classic fundamental analysis you’re getting to grips with qualitative metrics as well as quantitive indications of performance. That takes time to learn. People who really delve into all the aspects of analysing an instrument, its competitors, the relevant sector and any geo-political impacts are most likely long-term investors.


Most people do a bit of both, even if they say they don’t

But even short-term traders, unless they live in a news-free vacuum, are probably, incorporating some of this into their thinking.

For a start, it might be what leads you to zero in on a particular asset class in the first place. Fundamental analysis helps identify opportunities while chart analysis helps to identify the right timing for entering and exiting a trade.


It can alert you to market manipulation

And if, for example, we didn’t know that the nature of the business that GameStop was in meant the company was fundamentally in trouble, the significance of the January 2021 push by retail traders to drive its share price higher would be lost.

Or consider the market correction when the pandemic first hit in March 2020: it dented the share price of many companies whose long-term outlook was strong, despite any short-term changes in consumption and behaviour by consumers in lockdown.

And as Gavin Holmes, Tradeguider CEO, points out, if you see market influencers or famous people sharing their views about, for example, cryptocurrencies on a Friday then there’s a chance they are letting the public digest the news over the weekend and then they test the market on the Monday to see if people are biting, before making a big move.

So while you might not trade the news, using it to highlight market manipulation can help determine the direction of your trade. If the news is good but the fundamentals of a company are weak for any reason, then you can use Wyckoff VSA to determine whether the price is going to go down and the professional money is behind some `fake news` despite there being rumours out there saying the stock is strong. Then you know you`ve got an opportunity to short that instrument. Meanwhile the opposite is true: If the background on an instrument is strong then the general investing direction is long. 


Summary:  Stay sceptical

Once again, it’s important to remember that news needs to be taken with a pinch of salt. And there needs to be an element of scepticism when it comes to a company’s financial accounts too. While it might not be the norm, history shows that company accountants have been known to falsify the books: look at the story of Enron for instance.

`Don’t try to get too involved in what’s going on behind the scenes because you’ll never know [for sure]`, says Gavin.

So while you know the wider news backdrop, it’s always important to keep that questioning mind engaged.

And as he adds, `The only thing you can trust in the financial market is the chart.` 


When to Use Fundamental, Technical, and Quantitative Analysis - Investopedia

How and Why You Should Combine Fundamental & Technical Analysis in Forex Trading -

Fundamental Analysis vs Technical Analysis - Trading 212

Tradeguider is the home of Wyckoff VSA.  If you use a mix of fundamental analysis and Wyckoff VSA then our stock scanning service will help support you in that approach. It scans over 40,000 stocks whether by index, geographical region or sector, helping you to identify potential trading opportunities, then you can use the charts and your background knowledge of each stock to help you with your trade selection and entry, not forgetting your mindset skills as well.  Drop us a line to find out more. 

Posts Library

Five Steps to Consistent Trading with VSA Lite
Ways to Improve your Chart Reading - Part 2
Ways to Improve your Chart Reading - Part 3
A Newbie Trader`s Journey - Diary No 2
A Newbie Trader`s Journey - Diary No 1
Ways to Improve your Chart Reading - Part 1
Currency Spotlight: British Pound/US Dollar
An Affordable and Regulated Crypto Product
Introducing VSA Lite: a Gateway to the VSA World
Diamonds, Art, Wine, Property....or the Stock Markets? We Compare Investment Options
Reset your Plans for Success - A downloadable Worksheet
2022, A Year in Review
Some Universal Rules of Trading
Four Tips for Trading in Tumultuous Times
Tracking Your Trading Expenses to Maximize Profit
Stock Spotlight: Alphabet - GOOG
When Thinking Too Much Stops Your Trading Success
New Chances for Learning: June`s Mastermind Event
Should I Stay or Should I Go Now? Trade Entry and Exits
Is Technology Holding Back Your Trading? 5 Tips to Keep Your Tech on Point
Trading Plans and Journals: Fail to Plan is Planning to Fail
How to Select a Stock
2021, A Year in Review
Can Wyckoff VSA be Used to Beat High Frequency Trading?
The Best Way to Set a Trading Goal
Do you Need Fundamental Analysis if you Use Wyckoff VSA?
Can Trading the Markets Ever be Ethical?
Combining Technical Analysis and Wyckoff VSA - an Insider`s View
Derivatives and Wyckoff VSA
Trading Cryptos and Wyckoff VSA: 3 Things You Need to Know
Mindset Tips for Traders: 7 Ways to Help Your Trading Be More Consistent
Trading in the Time of Corona: 2020, a Review
Enhance Your Trend Trading Strategy with Wyckoff VSA Tools
How to Relieve the Strain of Chart Analysis with Trade Alerts
How to Avoid Common Beginners Mistakes in Trading
Politics and Trading the Markets
Q&A with Tradeguider CEO Gavin Holmes
Women in Trading: Insights from Female Traders Using Wyckoff VSA
Health Tips for Traders: 3 Ways to Improve Your Immune System
How to Trade Smarter with Rules-Based Trading Strategies
How to Know When the Reversal is Coming in Countertrend Trading
How to Gain a Competitive Edge by Following the Smart Money
Automated Trading Tools: Identify Opportunities at the Tops & Bottoms of the Markets
The 10 Fundamentals of Choosing a Broker
4 Key Reasons to Use the Wyckoff VSA Trading Method in Your Strategy
How to Choose a FOREX Broker: 5 Things to Consider
How Tradeguider's SMART Trader Software Reduces Chart Analysis Time by 80%
VSA FOREX Strategy: How to Use Volume in the FOREX Markets
Why Wyckoff VSA (Volume Spread Analysis) is a Three-Dimensional View of the Market
When to Make the Leap from Demo Trading to Real-Life Trading
Technical Analysis of the Financial Markets - Leading or Lagging?
Market Manipulation - Fact or Fiction?

Free Access to the Tradeguider  Resource Center

Become a VSA trader now. Access everything you need to learn to trade using Wyckoff VSA: educational videos, PDF’s, eBooks and courses. No software required.