“A good tracker is interpreting all the time, from every little sign, you know? Not just interpreting the age of the tracks but also: Is it wounded? Is it hungry? A good tracker is interpreting a lot.”
— Allan Savory
Imagine you’re a professional tracker…
You’ve been assigned the task of tracking Bigfoot for a professional photographer.
Yes… that Bigfoot.
If you can lead the photographer to Bigfoot, you’ll be paid a sizeable fee.
A very sizeable fee.
All the other trackers have refused the assignment as either too dangerous…
It is Bigfoot after all…
Or impossible to achieve given the question as to whether Bigfoot actually exists…
It is Bigfoot after all.
You take the assignment because while you don’t know if Bigfoot actually exists, you do know the reward is worthwhile if you can complete the job.
And, more important, you’re a real tracker. Not some johnny come lately book reader who thinks tracking is an academic exercise.
So… having accepted the task, you set out to plan the best way to find Bigfoot’s trail.
You go through all manner of material purporting to be “surefire” ways of quickly locating the beast.
Some guides suggest gathering all manner of data such as weather patterns, topographical maps, botanical maps, migratory patterns, etc. This data is to be used to pinpoint where Bigfoot “should be” at this time of year.
Within a few square feet no less.
Then of course, you have only to go to the pre-determined location… and wait for the big guy’s arrival.
A second (and much smaller) set of materials suggests spending time locating Bigfoot’s trail by surveying the ground from above (via helicopter), identifying several likely spots to pick up his trail, then quickly eliminating them one by one until you find it. You would then have the relatively simple task of carefully following the trail until it led you to the prize.
The analogy I’m drawing should be fairly obvious, but…
The first method of finding Big Foot is analogous to so called fundamental investing. Researching/gathering enormous amounts of data, synthesizing said data to create an investment mosaic and arriving at a conclusion. In the case of investing, that conclusion is a specific price which represents so called “intrinsic” value and a precise, projected price… aka, where Bigfoot should be.
The latter method? Equates to price action (chart reading) trading… A method where you
- find the general direction of a security’s price via the structure on a higher timeframe (from the air via helicopter) and then
- identifying potential trades on a lower timeframe (finding the trail on the ground),
- stalking good, low risk trades (following Bigfoot’s trail from a safe distance of course) and finally
- executing your well rehearsed, low risk trade entry (taking the shot)
No prediction… No complexity.
So the question is… which method would (do) you choose?