Episode 014 : Ricky Analog – The Dark Side of Fundamental Analysis

June 7, 2019 beyondthepdt

Ricky Analog is often known on Twitter as one of the most well-versed traders for his understanding of fundamental analysis. He also is one of the traders at StockTraders.net. Although we went into this interview expecting him to be a fully fundamental-based trader, we learned that fundamentals make up a mere 10% of his overall thought process on a given trade, with technical making up about 90% of his trading. With that being said, he tells us why he feels as though fundamental analysis is still vital for his trading, as well as how he got started trading out of college.

Overall, this is an episode you are going to want to listen to if you have the time to! While these blogs help for a quick recap, the lessons learned in these episodes far outweigh the knowledge we can portray in our blog posts!

Who is Ricky Analog?

Ricky began trading about five years ago now after having created a passive business that him and his business partner have been working on since college. The type of business that him and his partner run is online retail, doing a lot of business through Amazon’s FBA program. However, once the business started generating passive income for him and his partner, he decided that he wanted to try something new. Because of this, him and his business partner funded a $10,000-$15,000 E*Trade account but blew it up very quick during the first pot stock boom.

After they blew up this account, his partner decided he did not want to continue trading but Ricky wanted to keep learning about trading because of the possibilities it could bring him. For 2.5 years, Ricky was an unprofitable and inconsistent in his trading, but after learning a bit of fundamental analysis during the second half of his first year and learning from respectable traders, his trading vastly changed.

How Did Ricky Learn Fundamental Analysis?

After joining a trading room – the Spartan Trade room to be exact – he learned from some of the good traders in there that fundamental analysis has a lot of value. He would ask some of the traders in the room how to read filings but was given very short answers that did not provide a lot of help initially. However, he told us that these short responses forced him to learn on his own and that he owes a lot of gratitude to them for forcing him to learn on his own.

This goes back to a very important idea that many times new traders fail to understand. There is no shortcut to success – most new traders are expected to be given the holy grail, but even when you are given a successful strategy, very rarely does anyone use it correctly without putting in their own work to refine it. For Ricky, he learned filings by simply reading thousands of them over the course of his trading career. After seeing the same words and filings enough times, he began to understand what they all meant. If you are interested in getting a very solid start to learning fundamental analysis, consider checking out Ricky’s YouTube channel, where he has a number of in-depth fundamental analysis videos!

Why is Technical Analysis More Important in Ricky’s Trading?

When he explained this to us, he made it clear that this applies mainly to low-float stocks. Understandably, as many of us know, these are junk companies who usually have no real business and are burning a lot of cash. Because of this, they need to raise money through offerings and through being able to exercise their warrants, so they will release press releases to pump the price of the stock up in order to get out of their positions or to file offerings.

However, this does not mean that the areas in which these warrants are able to be exercised will act ass resistance. While this does help to give Ricky a bias on a trade, technical analysis will always give a better idea for intraday action. Very rarely do one of these low-float junk companies become a real company, so fundamentally, it can be assumed that the price will fall. However, technical analysis will give a better understand as to where the value of the stock is going to be throughout the day.

Ricky’s Tip to Becoming Consistent

When we asked about how he recommends new traders start off, Ricky told us that he recommends taking data on every single trade you take. This is no new news by any means – we have talked to a number of other traders in the past who have highlighted how important it is to track the trades you take. He recommends looking at the strategies that are working for you and focusing on those – much easier said than done, of course. With that being said, by getting as much data as you can on the trades you are taking (and properly applying it to your trading), you should be able to work on finding consistency in your own trading.

Closing Thoughts

Ricky provided some of the most insightful information we have heard yet. Again, if you have not had time to listen to this one, it is not one you are going to want to miss. While we went into this interview expecting Ricky to be very heavy on fundamentals, but we learned that technical analysis is still a massive part of his trading.

We had a great conversation with Ricky and absolutely learned a ton. Hopefully through episodes like this, you are all learning a lot too!

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