Ever heard the term technical or fundamental trading?
Do you even know what the difference is. Even more important is one approach more profitable than the other?
Now, I'm going to discuss this; however, be sure to stick around because at the end of the video,
there's going to be a giveaway that I'm sure you're going to be want to be part of.
Let's explain what the terms mean and then I'll tell you how a typical day trading looks like for me.
I'll invite you into my world to show you how I attack the market.
Okay, so what is a fundamental analysis?
Fundamental analysis for a Forex trader basically means he's looking at the general state of a particular country's economic standing.
And he'll pitch this against another country's economic standing and hopefully, determine which currencies
he should be buying over which countries' currencies he should be selling.
Now, the biggest determining factor of a country's currency strength is the local interest rates.
Now, central banks around the world set the country's interest rates to control typically, inflation.
Now, in doing so they monitor the state of the country's economic health by assessing key data
Such as retail sales,
employment,
producer prices, and so forth. Now, a country's economic...
health is gauged by its currency value and the fundamental forex trader will put all these information together and...
make a decision on which countries have a strong currency and which countries have a weak currency.
Now, generally speaking a fundamental forex trader will be trading a...
longer time frame. His predictions are more likely to play out over a sustained period of time.
Let me give you an example of what a fundamental trader could look like and something you might be more familiar with, say the stock market.
Now, the largest company in the world is Apple.
Now, a fundamental trader that wants to trade Apple shares, for example may look at the company's products.
What's the new iPhone 10 like, for example? They look at the sales numbers around the world. How many...
iPhones are being sold in China, or how many iPhones are sold in India?
Are they buying the iPhone in preference to the competitor, Samsung or whatever is?
They'll look at the cash flow of a particular company and the earnings now, and potential earnings for the future.
Then the fundamental trader will make a judgment by putting all this information together on whether he should be buying...
shares in apple or not. He's looking at the big picture.
So should shares on Apple be bought or sold, that's based on the big overall picture of the company.
Now, on the other hand, a technical trader will look at previous price action of a currency, or a stock, or indeed. Whatever...
trading entity, and use this previous price action to help predict where prices may go in the future .
A technical trader believes in essence, that human nature has a tendency to repeat itself.
And in order to do this, a technical trader will look at the price chart;
be it a candlestick chart, a bar chart, or a line chart.
A trader that trades purely technical analysis believes that all the information about a particular trading entity...
is reflected in the price, and therefore on the charts.
So, no need to look at the fundamentals or indeed be interest in them at all.
Now, traders that use technical analysis, typically use various tools in their analysis. And these are known as indicators.
The most commonly used Indicators are the basic support and resistance lines.
Then you have the moving averages,
And then you have the other Indicators that basically are derived from the moving average, like the MACD and the CCI.
And then you've got the various oscillators that tell you supposedly if price is overbought or oversold.
Now I'm not going to go into all the pros and cons of all the different indicators out there.
That's a whole basic course in itself, but it's fair to say the choice is vast.
So is trading technical? Is technical trading more profitable than fundamental trading. Nope. There's no proving either way.
Instead it's about how you use both practices in your trading to make profitable trading decisions.
Let me tell you now how I trade, and that's by using a combination of both methods.
I typically wake up in the morning, make myself a coffee, and get to my trading screens an hour or so, before the European session starts.
So what I do, I go to all the news feeds and look to see if there's been any...
fundamental news overnight, such as economic data releases, central banks speakers,
or world affairs. Anything that's pretty market sensitive.
I'll then go to my charts and look at price action; basically look at what's happened to price overnight.
See what price has been doing in the past.
Now, I'll then use some technical analysis to help me predict where prices may go in the hours ahead.
Now, I've improved it.
I have a predetermined set of trading rules that give me entry and exit signals based on recent price action.
So I'm predominately using technical analysis.
Why? Well, personally for me it takes to all the ambiguity out of the market.
I need structure to keep me focused. Just the way I'm built.
I need to be able to see if this does this or that does that, then I will do this.
Now, I need a defined set of rules to keep me on track. For me relying purely on the fundamentals...
isn't precise enough for me to act on, but certainly a very important overlay in my trading?.
I believe that as a trader you can be successful both as a technical trader as much as you can a fundamental trader.
But you should certainly should have an understanding of both.
For example, knowing that key fundamental economic news is due for release.
That release could have a major impact on prices.
This could cost you a lot of money and cause you a lot of heartache.
So you need to be aware of that.
I mean, think about it for a moment if your day trader...
and you're trading off the 15-minute, that one hour, or the 4-hour chart or so, and you're entering a trade just ahead of an...
important interest rate decision. yeah? That's basically like playing Russian roulette with your trading account. Madness!
if your fundamental trader knowing...
where key support and resistance levels is, is again so important. So the best way,
I think, to approach the market is using a combination of both.
A technical trader should have an...
understanding of fundamentals, and a fundamental trader should have the basic understanding of technicals.
Now, I'm outlining board strokes here, but I'm hoping you're getting my drift.
Guys, I've been overwhelmed by some of the great comments...
you've left me here on the videos that I've been publishing.
I do try to respond to as many as I can, so I mean, if I haven't responded to you yet. Keep watching!
I'm sure I'll get back to you. But there's a special big, thank you. I want to do something quite unique here.
I'm going to give away three annual passes to our trading room here at forexsignals.com
Now, inside the trading room...
you can watch me trade the markets live and also sink your teeth into the pacific strategies that I use throughout the trading day.
I've also published hours of content in there, as well. So there's a lot to get...
..involved with. Now, if you'd like a chance to win all you have to do is the four things below:
Sounds a bit of a challenge, I know, but I assure you it is all pretty simple stuff.
First thing, you got to do is give me a thumbs up if you enjoyed the video. In fact, if you give me a thumbs down...
if you haven't enjoyed the video, that's fine, as well. I won't disqualify you from the competition. That's your call.
Second thing you need to do;
subscribe to the channel if you haven't already done so.
An the third thing, leave a comment with #forex , and the fourth thing is to share this video with at least one of your...
friends, colleagues or in the family.
I'll announce the three winners here on video that I'll publish on the 16th of November, so in the meantime...
Happy trading and best of luck!