Fundamental vs. Technical

There are two main schools of thoughts in analyzing currencies, Fundamental and Technical. Fundamental analysis looks at the underlying economics of the currency, such as interest rates, money supply and central bank views. Technical analysis on the other hand involves looking at price, price structures and aggregations of price to come to a conclusion about future price action.

The single difference that will affect a trader’s decision to trade technical’s or fundamentally will be time frame. Fundamentals do not play out on a 1 hour chart very well, but a technical trader may use the hour chart with success. Fundamental trades tend to be involved in a trade for a much longer time frame as in months and years.


Fundamental traders use information released by central banks (rate decisions), governments (official payroll data) and private institutions (Michigan Consumer Confidence), to determine these longer term trades. These releases happen over a longer time, and may take months or even years to affect the currency as believed.

Technical traders look at price movement and formations for clues to the currencies. They believe that the price action includes the fundamental movement as, “priced in” already. They look for overbought and oversold conditions, head and shoulder patterns and a whole host of other conditions and indicators to tell them where price is headed.

Though they seem opposed, the two can be used separately as well as together. A fundamental analyst may look at technical to find the best time to enter a trade, and a technical trader may wait for entry on a trade until a release happens and creates a trend. As you begin trading, do not take the attitude that you are strictly one or the other. You will be in a small elite group of traders who mix the two magic’s together.

Comments

Add New Search

Replica Designer bags     |121.33.99.xxx |2010-08-25 23:49:34 Chanel, this word sends chills up many people’s spine. It offers so many beautiful Chanel handbags that to name all of them in detail would take to long. The double C logo is always classic and makes you so charming wherever you go. Moreover, a designer handbag http://www.brandbagonline.com could reflect one’s noble temperament and personal elegance and characters. Reply 0   0

Write comment
Name:
Email:	do not notifynotify
Website:
Title:
	Please input the anti-spam code that you can read in the image.

Powered by !JoomlaComment 3.26

3.26 Copyright (C) 2008 Compojoom.com / Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."