Fundamental, Technical, Structural, Psychological

Yesterday Stanley Druckenmiller, awesome last name, called it quits to his hedge fund. A speaker on Bloomberg yesterday around 5pm talked about Mr. Druckenmiller's abilities that set him apart from other traders. The speaker broken down four specific categories that made Druckenmiller very profitable trader.

1) Fundamentals

2) Technical

3) Structural?

4) Psychological

1) Fundamentals would cover the macro environment. Today is a simple example of how the fundamentals affected the equities market. When jobs and Phillie numbers came below expectation the market sold off. Factoring how economic data is part of fundamentals of the market. In conjunction the company one plans to invest in has many fundamental data to consider before investing. Those data include P/E ratio, revenue, profits, and so forth.

2) Technical covers charts analysis. One can derived trends in the stock price to determine best point of entry and exit. The analysis covers many tools such as time interval, MACD, VWAP, Vol, CCI, RSI, and so forth.

3) Not sure if I heard it incorrectly but structural was another category. I need to think about this a little longer because I am not sure what it really means. If I have to make a guess I would think it means the type of trade to make in a stock. Whether one goes with trading common shares, preferred shares, and/or options and the quantities with respect to each type of trading vehicle. In options one has to consider the greek letters and spread values when making a trade. Common shares would not make as much profit as options if trader correctly predicted outcome, however common shares do not have an expiration date that decays it value as time passes.

4) The human mind is what makes one trade a certain way. Although computers may rule in trading today and the future, it is the human the has the final say in trade executions. They are the operators of the computers. If they turn off the computers then there are no automated trades. Going off in a tangent. Emotions can effect the types of trade one makes, and understanding those emotions can benefit his/her trading.

I only generalized the four categories and more can be elaborated within each. At least this is a start.