Fundamental or Technical- novice traders should start with?

technical analysis is really easier to understand. But without a fundamental analysis, it will be difficult to understand the behavior of the market. All movements in the market are caused by the reaction of other participants. All movements can be caused by some or other macroeconomic events. You can not just be limited to technical or fundamental analysis.

Gorh posted:

snapdragon1970 posted:

Cloudballs posted:

snapdragon1970 posted:
80% fundamental,20% technical this is what professional hedge funds use,price needs a reason to move, very little to do with technical's ,confirmation and entry point come a second.

Wow, is that really true? I have been 100% technical and have ignored fundamental until now. What about short term trading? Still need fundamental for that?

Professionals don't stare at the screen all day long looking for a technical setup,why should you,just not the way the market works, As Traders we need something to push the price around otherwise its mostly noise intraday especially on the majors, If your scalping on 1 min time frames not much need for fundamentals:)
 

What about news trading within several minutes duration movements. You should to be up to date with information about politics and macroeconomics to forecast probably movements.

Most news events are priced in before hand ,unless the market is caught totally wrong footed ,but we normally get leaks and speculation so the market doesn't freak out,unless you can stomach whipsaw best to sit it out.

Technical and fundamental analysis have evolved from, and are perfect for, share markets, commodities, and related derivatives, but when applied to the Forex market they simply don't work that well.

The Forex market is entirely different from shares and commodities trading, and it exists for entirely different reasons. Speculators make up a tiny proportion of the Forex market. Retail traders like you and me represent just 4% of the market volume. Major hedge funds account for only 14%. So, 82% of the market is not the slightest bit interested in prices, or price directions, or any of those fancy technical squiggles and lines on a price chart. That means the people and/or institutions making those trades are not doing so for the same reasons as you and me. Businesses trade internationally and must settle transactions in foreign exchange regardless of price direction. International travelers exchange currencies daily because they need to, and not because a moving average crossover occurs or interest rates rise in Japan. This makes the Forex market an extremely random one, more so than almost every other market.

If you really want to profit from Forex, forget technical and/or fundamental analysis, and focus instead on currency strength/weakness analysis. Don't simply compare the AUD with the USD when contemplating a trade position. Instead, compare the AUD with the USD, JPY, CAD, NZD, GBP, EUR, and CHF, to determine if the AUD is universally strong or weak. If it's strong, pair it with the weakest and buy. If it's weak, pair it with the strongest and sell. Watch the difference this makes to your trading results.

As a long time Crypto trader I can tell you most people who use Technical Analysis are not successful. I'm 2 month into Forex and been killing it so far. Check my profile for proof

agressiveFX posted:
As a long time Crypto trader I can tell you most people who use Technical Analysis are not successful. I'm 2 month into Forex and been killing it so far. Check my profile for proof

Interesting, are you trade on only crypto? May I know your view on BTC/USD (long term)?

In Forex trading both fundamentals and technical are equally important. Depending on only one factor can result in a more risky trading. fundamentals give an idea about the market movement and a good knowledge of technical is helpful in finding the right time of entry and exit in the market.

I take fundamental very seriously. There can be a lot of information but it really helps give longer term direction

HankyPanky posted:
I take fundamental very seriously. There can be a lot of information but it really helps give longer term direction

Absolutely true! Fundamentals are really helpful for the direction in long term, but you can't completely neglect technical. For how long you have been trading?

togr posted:
You cannot separate technical and fundamental analysis.
I suggest to focus on technical and use at least a bit of fundamental to avoid major economic news and counter trend trading.

Exactly, only using both technical as well as fundamentals will result in profitable trades.

I mostly use technical analysis. Price action trading is all about that. Using technical analysis without fundamentals to identify trends on the charts.

togr posted:
You cannot separate technical and fundamental analysis.
I suggest to focus on technical and use at least a bit of fundamental to avoid major economic news and counter trend trading.

Yes i agree with you. Technical and fundamentals both are inseparable.

So many ways to trade and so many different personalities trying to trade. What works for one person may not work for another. I live off of technical analysis. The only use for fundamentals I have is when to avoid trading. I do not trade high impact economic reports and I tend to try and exit or hedge my positions when a high impact report is coming out. I look for trends for trade direction and I'm reluctant to trade in an exhausted trend and usually wait for confirmation of a trend change before I re-enter a particular market. But that's just my style and it will work for some people but not everyone. Our personal trading journey's lead us to experiment until we find something that works for us.

maria_taylor posted:

togr posted:
You cannot separate technical and fundamental analysis.
I suggest to focus on technical and use at least a bit of fundamental to avoid major economic news and counter trend trading.

Exactly, only using both technical as well as fundamentals will result in profitable trades.

With respect, this is simply not true. The Forex market is random and rarely conforms to technical and/or fundamental analysis consistently.

mrtodd posted:
So many ways to trade and so many different personalities trying to trade. What works for one person may not work for another. I live off of technical analysis. The only use for fundamentals I have is when to avoid trading. I do not trade high impact economic reports and I tend to try and exit or hedge my positions when a high impact report is coming out. I look for trends for trade direction and I'm reluctant to trade in an exhausted trend and usually wait for confirmation of a trend change before I re-enter a particular market. But that's just my style and it will work for some people but not everyone. Our personal trading journey's lead us to experiment until we find something that works for us.

I can very well relate to you. Even I use fundamentals only when I need to make a decision about not placing a trade. But otherwise I am a technical trader and plan my trade on the basis of chart patterns, indicators and trend lines. And I am happy to share it works for me majority of the times.

It is a subjective matter but I feel that to tame this random forex market and make the best out of it, technical and fundamental analysis is of considerable help, at least it is for me and many traders like me I guess.

maria_taylor posted:
It is a subjective matter but I feel that to tame this random forex market and make the best out of it, technical and fundamental analysis is of considerable help, at least it is for me and many traders like me I guess.

Let me clarify my point. Fundamental analysis is a forecast of what is likely to unfold into the future, based on a wide range of factors. Technical analysis looks at price action today to inform us about what is happening now. You can combine these two methods to gain insight into what is likely to happen next, and to time market entries and exits based on what is happening today. So from this perspective, I agree with you and others that technical and fundamental analysis ought to be combined.

But here's the problem. Technical and fundamental analysis evolved from the stockmarket, where all participants share a common cause...to invest for profit. This is simply not the case in the Forex market, where around 95% of its volume is derived from participants that could not care less about investment returns. For example, nearly half of daily Forex turnover represents foreign exchange swaps, the simultaneous purchase and sale of identical amounts of one currency for another with two different value dates, with the single aim of swapping interest rates. Another 19% is derived from international trade, tourism, and foreign aid transactions. In fact, spot currency transactions represent just one-third of the daily turnover, and the vast bulk of this is interbank activity. You and I, us retail traders, represent just 4%-5% of the daily turnover, and we are the only players seeking investment returns from speculative activities.

Effectively, a 1% fluctuation in the 95% group will translate into a 20% impact on the 5% group...us...with that impact having no relationship whatsoever with current technical or fundamental factors. In the long term, I agree that fundamentals will dictate the ultimate value of a currency, but can you sustain those 1% fluctuations along the way? If not, fundamental analysis may add no value to your strategy. Better to evaluate currency strength-weakness, and follow the money flow!

Everyone has different ways of approaching trading. But I find both FA and TA to be very important for successful trading. Fundamental analysis will tell you about what is happening in the economy and markets whereas technical analysis helps in deciding the right entry and exit points in the trade. So, pay attention to both of them.

SwapTrader posted:

maria_taylor posted:
It is a subjective matter but I feel that to tame this random forex market and make the best out of it, technical and fundamental analysis is of considerable help, at least it is for me and many traders like me I guess.

Let me clarify my point. Fundamental analysis is a forecast of what is likely to unfold into the future, based on a wide range of factors. Technical analysis looks at price action today to inform us about what is happening now. You can combine these two methods to gain insight into what is likely to happen next, and to time market entries and exits based on what is happening today. So from this perspective, I agree with you and others that technical and fundamental analysis ought to be combined.

But here's the problem. Technical and fundamental analysis evolved from the stockmarket, where all participants share a common cause...to invest for profit. This is simply not the case in the Forex market, where around 95% of its volume is derived from participants that could not care less about investment returns. For example, nearly half of daily Forex turnover represents foreign exchange swaps, the simultaneous purchase and sale of identical amounts of one currency for another with two different value
dates, with the single aim of swapping interest rates. Another 19% is derived from international trade, tourism, and foreign aid transactions. In fact, spot currency transactions represent just one-third of the daily turnover, and the vast bulk of this is interbank activity. You and I, us retail traders, represent just 4%-5% of the daily turnover, and we are the only players seeking investment returns from speculative activities.

Effectively, a 1% fluctuation in the 95% group will translate into a 20% impact on the 5% group...us...with that impact having no relationship whatsoever with current technical or fundamental factors. In the long term, I agree that fundamentals will dictate the ultimate value of a currency, but can you sustain those 1% fluctuations along the way? If not, fundamental analysis may add no value to your strategy. Better to evaluate currency strength-weakness, and follow the money flow!

That’s quite an elaboration on the topic but I slightly disagree with you. Forex market is not that random market you think it is. The history defines the purpose for which it came into existence. The participants in FX markets care as much about investment returns and minimizing their risks. For reference, the international traders (crude, commodity, exporters & importers) have their roots into this market as they first hedge currency immediately after cracking the trade as they get settlement in spot market so they hedge in FX market.
And for the interbank activity, not only the retail traders, all the international trade deals are always happening through banks. Banks also hedge their risk in FX market and if you watch all fundamentals like economic data then you will get the clue of the directions looking at the trading activity.
 
Also the study about currency strength and weakness or money flow, all this can be identified through technical analysis first as it is a brief study of psychology of market participants supported by the fundamentals. Once fundamental news is out then technical strategies gets more momentum.

In forex market, Technicals comes first as it contains traders’ psychology and by traders I mean banks, importers, exporters and international banks who actually transact as you mentioned. Retail traders come here to make some profit but all those big shots come here for hedging their bulk currency deals. Most of the banks have special treasury departments for hedging the currency risk.

So I recommend that looking into technicals more closely in forex market, and backing it up by the fundamental news.

sarahlawrence posted:
Everyone has different ways of approaching trading. But I find both FA and TA to be very important for successful trading. Fundamental analysis will tell you about what is happening in the economy and markets whereas technical analysis helps in deciding the right entry and exit points in the trade. So, pay attention to both of them.

Did you mean, FA for fundamental analysis & TA for technical analysis? Or anything else?