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Technical analysis vs Fundamental Analysis

Discussion in 'Beginners Bootcamp' started by Lhar_fpa, Oct 13, 2009.

  1. Lhar_fpa

    Lhar_fpa Private, 1st Class

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    What analysis are you using? Fundamental or technical? Share me some of your ideas and let's talk about it.
     
  2. Music Man

    Music Man Corporal

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    I use technical analysis. The main reason is that TA is about what the market is doing, while fundamental analysis is about what the market ought to do. We all know how often people do what they ought to do, right?

    It's not like I ignore FA, I just don't buy the fundamentals while the market is ignoring them. Eventually, fundamentals have their effect, but the market is more like a drunk waking up with a hangover than a scholar cramming for a test. :)

    MM
     
  3. Ricex

    Ricex Sergeant

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    True fundamental analysis is a very complicated thing indeed, you have to create models using maths and integrate huge amounts of variables into your calculations and it is all very time consuming, not only that but the chances of getting it right are very low. It is very old school thinking to trade by this method alone, and it's not the way to go if you want to make money out of forex trading. I don't know anybody who trades like this today.

    Technical analysis on the other hand is what everybody is using, and that's why it works. Everybody using the same tools looking for the same levels etc. etc.

    I keep an eye on the economic news because it interests me and keeps me in touch with the bigger picture, but it very rarely has a bearing on my trading decisions directly.
     
  4. Lhar_fpa

    Lhar_fpa Private, 1st Class

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    So you guys, haven't tried fundamental analysis? But in fundamental analysis, you can also predict what's going on in the Forex market, because as what they say the better a country’s economy, the more trust other countries have in that currency. So, that affects the movement of the currencies.
     
    #4 Lhar_fpa, Oct 15, 2009
    Last edited: Oct 15, 2009
  5. Ricex

    Ricex Sergeant

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    If only it was that easy Lhar.

    It is very difficult to predict accurately forex market movements with fundamental analysis. You can get an overall picture if you like, but that won't tell you to enter at such and such level, or exit at this point here.

    Fundamentals can help in choosing a certain currency over another maybe, but all I need is staring at me on the screen. All the rest is noise and distraction and can blur your vision to the only thing that matters, price action.
     
  6. Stony

    Stony Sergeant

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    Hi,

    I have a question to all fundamental analysts: how do you explain the 600-pip-rise of GBP/USD in the last four days by fundamentals? And: do you know any fundamental analyst who predicted this move before last Monday?

    Anwers greatly appreciated (but I doubt that there are any...)

    Regards, Stony
     
  7. Lhar_fpa

    Lhar_fpa Private, 1st Class

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    What I am trying to say here is that the two analysis are important. You can't say that the fundamental analysis is better than the technical analysis, same with technical analysis. My point here is that the two analysis are important in determining the trade.:p
     
  8. Lhar_fpa

    Lhar_fpa Private, 1st Class

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    I am not in a live account yet but I am just saying my observations about these two types of analysis. I am not a fundamental analyst nor a technical analyst, I am with both analysis.:p
     
  9. Music Man

    Music Man Corporal

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    Fundamental analysis has its place, but it really is too slow an indicator for currency trading. I would have started shorting the US dollar years ago and would never have stopped, as it is a fundamentally bankrupt currency. However, that has little to do with the relative price of the greenback. So, looking to price action is what you need with Forex. Fundamentals are good to know, but not so good for intraday trading in Forex.
     
  10. Ricex

    Ricex Sergeant

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    You did ask for ideas Lhar, I was giving you my ideas of fundamentals. Every trader has their own point of view on these matters. You find it good to mix the two together which is great if it works for you, others like me find it a distraction and of very little help to my strategy.

    Can you tell me how you use fundamentals in your trading, or a case where it has influenced your trading decisions?
     

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