Fundamentals, technicals or both?

There are two main ways that traders analyse the financial markets:

  • Fundamental analysis involves looking at the economic factors surrounding a currency, such as central bank statements, money flow and inflation

Technical analysis involves looking at an FX pair’s price chart, using indicators and patterns to determine where it is headed next

Your choice between the two will dictate how you navigate the markets, and which opportunities you’ll trade. You don’t have to stick to one of the other, though – many successful traders build an approach that works in both methodologies.

If you’re primarily a technical trader, for example, then you risk being blindsided by market volatility if you ignore the news surrounding a currency. By incorporating fundamental analysis into your strategy too, you can lower your overall risk.

Similar Posts

  • Start simple

    Bysaif Gill

    Another key consideration when you’re still in the early days of trading is not to take on too much too soon. Opportunities abound in the FX markets, but successful traders know which ones to seize and which ones to let go. It’s best to begin by only having one trade open at a time, giving…

  • Manage your capital

    Bysaif Gill

    Another key factor in controlling risk is to manage the money you’re allocating to any given position. Many successful traders stick to the 1% rule, which involves only ever risking 1% of your total funds on any given trade. If, for example, you have £5,000 in your account, your total risk on any position would…

  • Start with a demo account

    Bysaif Gill

    Speaking of trying things out, we’d always recommend that beginner traders start with a forex trading demo account before they commit real capital. That way, you can ensure that any early mistakes are made in a simulated environment that won’t end up costing you money. Most trading demos use real market pricing, so they’re as close as…

  • Make a forex trading plan

    Bysaif Gill

    One of the best things you can do to ensure that you start trading forex successfully is to make a comprehensive plan before you even consider opening your first position. The more information you include in your forex trading plan, the better. You should think about why you’ve decided to trade forex, plus what your goals are and…