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Contradiction between Fundamental & Technical analysis??! 22 replies

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technical analysis -or- fundamental analysis

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  • First Post: May 17, 2007 12:44pm May 17, 2007 12:44pm
i recently went to a trading seminar and the guy said:


- u can either trade using tech analysis or fundamental analysis.
- either way u only need to concentrate on one and NOT both.


is that really true when it comes to forex?
I'm a technical trader. But I use fundamentals to know the big picture of a cross. So a technical trader and a fundamental investor!
Quoting aqibsherwani
i recently went to a trading seminar and the guy said:


- u can either trade using tech analysis or fundamental analysis.
- either way u only need to concentrate on one and NOT both.


is that really true when it comes to forex?
Depends on the individual trader.

I use fundies for the big picture, long term view (Days & weeks ahead)

Technicals on the short term stuff. (Scalps, 5 min to a few hours)

I think the blanket term of you have to choose one or the other is incorrect.
well thats one version of the truth. i personally wouldnt say that a tacit awareness of either side can hurt - however if you demonstrate a known expectancy using solely one form of analysis there may be no need to fill in the blanks. worse, the other side of things may distract and therefore detract from that, which i guess is the point of the speaker. either way your job is to 1. discern a level of value at current price in view of past prices 2. gather and evaluate information concerning future prices

curious, what was your initial reaction when you were told this?
You need insight on an everyday basis to consistently make successful trades and be profitable. The only way to gain that type of insight is to learn how to find, interpret, and apply the news of events around the world as they happen to your trades. Simply, I always use consider both FA and TA. But I prefer fundamentals.
Do not focus on making money; focus on protecting what you have.
I use both. I started with a technical only view believing that the fundamentals are included in the price, but I've come to respect the power of fundamentals. I don't think its right to say use one or the other. You have to find your own way. I know that sounds very criptic, but everyone is different and everyones financial situation is different. You have to find a method of returning profits that comfortably fits your situation.
Follow the money. Follow the money. Follow the money.
I suggest using both. I've had a bad experience when trading on only technical USD CHF unaware that a big event was pending. The news went against my direction and made me lose trades. while technical is a result of past performance, fundamental focuses on what is likely to happen.


Kenny
Quoting aqibsherwani
i recently went to a trading seminar and the guy said:


- u can either trade using tech analysis or fundamental analysis.
- either way u only need to concentrate on one and NOT both.


is that really true when it comes to forex?
I disagre completly with that. It can not be said generally. It s not the same if u are on 5 minut or 4h or more.

And finaly . If u have by or with TA all possible sign to sell, without checking the FA which telling u diametral moment will happend, is crazy act. Aask my pocket
I would say it depends on your trading. If you scalp major support and resistance points, the fundies arn't so important. However, if you trade long term, it is essentially the fundamentals that fuel price action, mainly interest rates.

I'm always dubious of these forex seminars. If these guys could really do well trading forex, wouldn't they be doing that instead of running seminars?
Quoting peterM
I'm always dubious of these forex seminars. If these guys could really do well trading forex, wouldn't they be doing that instead of running seminars?
"These guys" are good in running seminars, like teaching......, but trade themself is diff story.

i mean like teacher and students. some of my teacher at school can only teach for living.
I Deeply Love My Virtual Life In Virtual World , RLC
Thats why they are making money holding seminars and not trading.....

"Those who can't , Teach."

Or in the Forex world....."Those who can't, sell a worthless system or hold expensive seminars!"
Someone recently posted an article on this forum about how fundamentals
tell us which direction the market is moving in and technicals tell us where
to set our stops and entry/exit prices. Trying to justify being oblivious to one
school of thought or the other is like refusing to learn something that could
make you money.


This .pdf tells basically the same thing, and describes a trade involving the
GBP/AUS cross that rose about 400 pips on the news of mutual interest rate
hikes.

Quote
In that period, the GBP/AUS cross pair moved from 2.4600
to just shy of 2.500, a nice score based on knowledge of forex
fundamentals. "It worked out very well in a short
period," [Forex.com's Brian] Dolan says. "This was one where
it struck me that [the currencies] were at different junctures
on monetary policy and it suggested a trade to me."
Attached File
File Type: pdf FOREX - Fundamentals article 2007 01.pdf   270 KB | 2,163 downloads
You can be young without money, but you can't be old without it.
Quoting blunderbuss
Someone recently posted an article on this forum about how fundamentals
tell us which direction the market is moving in and technicals tell us where
to set our stops and entry/exit prices. Trying to justify being oblivious to one
school of thought or the other is like refusing to learn something that could
make you money.


This .pdf tells basically the same thing, and describes a trade involving the
GBP/AUS cross that rose about 400 pips on the news of mutual interest rate
hikes.
Thanks for posting that article.
Quoting clockwork71
"There are some traders that rely totally on fundamentals. There are some that rely totally on technical analysis. Then there are some that use both. I tend to use fundamentals only in the sense I know when not to trade."

I really like this statement.
The nail that sticks out gets hammered back in
first, allow by popular acceptance amongst institutional traders, technical analysis has taken over from fundamentals in a big way --- in the stock market, at this time, WHAT fundamentals do you follow ?

with forex and the derivitives and indexes, one can chart the up and down of the markets with amazing results.

fundamental analysis is impt a few times a year, when markets change, although nothing has altered directions except temporarily, for a year or so --- news does it only for a day or an hour and technical can follow that easily enough.

No, i think like "investing", fundamental analysis is of no real importance at this moment in time, and whether or not it will ever regain even a smidge of anything it had in the past remains to be seen for quite some time.

I shall vote "technical" all the way !

enjoy and trade well

mp
The charts are quite tradable most of the time. Its like reading the alphabet for those who know basic TA approach. But to profit in the long term you have to be more advanced then most. I never care about the news and rely only on the price action.
Fundamentals are never important until they rise up and kick your butt. That said, changes in fundamentals will adjust PA to new trading levels, and TA will help you read the tea leaves of PA. I find it best to focus on PA with well structured, but limited, TA. But to focus on one exclusively over the other is foolish.
strangely enough, once very familiar with tech analysis one can see the stirrings in the water that result in being bitten on the nether regions --- not all of course, but since price action is graphed via candles and indicators, the "twitches" the markets make (because of human interactions) become visible in undecided trends, strong divergences and often outright pre - fundamental change movements.

it takes one time to understand, but I will bet anything that its easier to understand an indicator than rumor or speculation as to fundamentals.

believe that strongly

mp

Quoting Peglow1
Fundamentals are never important until they rise up and kick your butt. That said, changes in fundamentals will adjust PA to new trading levels, and TA will help you read the tea leaves of PA. I find it best to focus on PA with well structured, but limited, TA. But to focus on one exclusively over the other is foolish.
Quoting mparker
strangely enough, once very familiar with tech analysis one can see the stirrings in the water that result in being bitten on the nether regions --- not all of course, but since price action is graphed via candles and indicators, the "twitches" the markets make (because of human interactions) become visible in undecided trends, strong divergences and often outright pre - fundamental change movements.

it takes one time to understand, but I will bet anything that its easier to understand an indicator than rumor or speculation as to fundamentals....
No doubt, you can see the market give hints of the FA prior to announcement. And I agree about divergences, candle formations, etc. I tend to be defenseive prior to a FA. My history proves too much risk at these times and would rather be safe than sorry. Once past FA, TA takes over for me and I get back to following PA.
If you've ever read any of Brian Marber's work, you'll be familiar with his hostile approach to fundamental analysis, which would certainly put him in the 'biased' category. But then there aren't many people who have been around the markets for over 50 years and are still alive (financially and otherwise) to tell the tale. Here's a quote from his Marber on Markets book:

"Most technical analysts were originally fundamental analysts, I've never heard of anyone who made the journey in the opposite direction."
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