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

  • 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…

  • Always use a stop-loss order

    Bysaif Gill

    Risk management might be the most important factor in dictating your long-term forex trading success – and the basic building block of any risk management strategy is the stop-loss order. Stop losses are instructions to your trading provider to close your open position if it moves a certain number of points against you. They are useful…

  • Track your progress

    Bysaif Gill

    Making a plan is an excellent start, but to truly trade like an expert you’ll want to keep meticulous records about your progress – noting down the outcome from every position and keeping track of the factors that made it a success or a failure. Luckily, you don’t have to do this all manually. Your…

  • 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…

  • Learn how leverage works

    Bysaif Gill

    Leverage is fundamental to forex trading – without it, you’d have to commit huge amounts of capital to earn a return. However, it is important to understand the effect that leverage has on your profits and losses. When you trade using leverage, your provider is in effect lending you the additional funds needed to cover the…