Does anyone still remember that fundamental analysis was once the only righteous path in trading? I started trading in 1978, back then very few people used technical analysis, and most market participants even thought that those who did technical analysis were brain-damaged. Ironically, not long ago, those big funds and financial institutions on Wall Street turned around and regarded technical analysis as pseudoscience.

And now? The situation has completely reversed. Any experienced trader will have some kind of technical analysis tool in hand to plan their trades. Truly "pure" fundamental analysis is almost extinct, except for those isolated academic factions.

The reason behind this major shift in perspective is actually very straightforward—money. Using pure fundamental analysis to make trading decisions has an inherent fatal flaw: it cannot generate long-term stable profits.

If you're not very clear about what fundamental analysis is, let me explain. Whether it's stocks, commodities, or financial products, fundamental analysis involves considering all variables that influence supply and demand. It uses mathematical models to weigh various factors—interest rates, financial statements, weather, and all kinds of other elements you can think of—to ultimately forecast where prices should go.

But the fatal flaw of this model is: it completely ignores the variable of other traders. Market prices are driven by traders' beliefs and expectations, not by the model. Trading volume comes from traders; if traders have no idea about your model, or don't believe in it at all, then all the variables your model is based on become worthless. Analytical predictions? They become useless.