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Which one? Technical or Fundamentals

  • #1
  • First Post: Dec 26, 2012 7:22am Dec 26, 2012 7:22am
Hello Traders

lets begin first with Fundamentals :
these guys predict price based on fundamental analysis ...macroeconomic... (intrest rates , GDP ...etc)

Advantages:
-predict the economic condition very well ...
-increase knowledge about the country that we will trade on its currency ...
-calendars that shows each day news ...

Disadvantages:
-they dont show entry and exit points ...
-you cant just predict price move on a single release of a news ... also you cant translate all news into an entry ...

Secondley Technical :

Advantages:
-focus on price movement ...
-trends , patterns are easy to make/identify ...
-charts are full of information about price and its life cycle and charts are free
Disadvantages:
-shows you what already happend ...
-relay on old indicators that has been forgotten ... should be improved !!
-false signals

ok ok I am myself a technical ... but begginer though ... so what do you think guys if there is any more adv. disad. for both Technical and Fundamentals ... please add ... I know there is more ... and I know we should use both ... but what can I say every thing has 2 faces the good & the ugly
let the chart to be your chauffeur ... -Forexmnstr-
  • #2
  • Dec 27, 2012 4:20pm Dec 27, 2012 4:20pm
Technical and fundamental trading are the different approach, at least in the longer term, the predictive strength of fundamental analysis is greater. Technical and fundamental have different languages determining the same situation, they always give the same direction and get the same results.
  • #3
  • Dec 27, 2012 8:22pm Dec 27, 2012 8:22pm
For newbies, would seriously advise them to stick to technical at least until they understand the market better. Fundamentals are tricky and using it to predict the market..you guessed it. There are a few traders who swear by fundamentals but ask them about the market impact based on a single news release, you'll get 5 diff responses from 5 diff traders and that's why it pays to stay away from fundamentals esp if you're starting out..
  • #4
  • Dec 27, 2012 8:58pm Dec 27, 2012 8:58pm
The two are not mutually exclusive.

When you cook a steak, you will have a hard time eating it with just a knife, or just a fork. Use both and enjoy your steak!

But seriously, I use tech. analysis for 1 to 2 week horizon, and fundamentals give a picture of the longer term. Trying to trade intraday on fundamentals will probably drive you insane, though, since most data will just be noise and not affect sentiment that much.
"Don't Panic..."
  • #5
  • Dec 27, 2012 11:03pm Dec 27, 2012 11:03pm
You're competing against Big Money. Big Money have teams of analysts who spend 12 hours a day analysing a single currency pair, calling contacts in the big multinationals and reserve banks, creating economic models etc. Do you have an edge against these people just by reading delayed news from Reuters?

With technical analysis, you're using the same information as Big Money i.e. the chart. The Big Money don't have an informational advantage here since you're both looking at the same chart.

Just something to think about.
  • #6
  • Dec 27, 2012 11:47pm Dec 27, 2012 11:47pm
Quoting KingKaivar
You're competing against Big Money. Big Money have teams of analysts who spend 12 hours a day analysing a single currency pair, calling contacts in the big multinationals and reserve banks, creating economic models etc. Do you have an edge against these people just by reading delayed news from Reuters?

With technical analysis, you're using the same information as Big Money i.e. the chart. The Big Money don't have an informational advantage here since you're both looking at the same chart.

Just something to think about.
Agree!

Charts can deceive us too. Big money can manipulate charts in short time frames.
Our best bet, like in any old school business, buy cheap sell high.
  • #7
  • Dec 28, 2012 12:52am Dec 28, 2012 12:52am
technicals and fundamentals...............look at a chart of Enron the tell me how a technical trader would have faired?

how about the housing market...i am sure technical traders didn't lose money.


fundamentals are the economic environment that affect transactions which are then plotted on a chart..................................it is odd how many so called traders don't know that a chart is just statistical analysis of price.
AVT INVENIAM VIAM AVT FACIAM
  • #8
  • Dec 28, 2012 2:53am Dec 28, 2012 2:53am
Quoting Forexnuts
For newbies, would seriously advise them to stick to technical at least until they understand the market better. Fundamentals are tricky and using it to predict the market..you guessed it. There are a few traders who swear by fundamentals but ask them about the market impact based on a single news release, you'll get 5 diff responses from 5 diff traders and that's why it pays to stay away from fundamentals esp if you're starting out..
Your right ... but sometimes you dont even know if your fundamental analysis is right or wrong ... for example ... the last cut on interest rate on AUD the pair AUD/USD should drop in price ... but guess what it actaully rised more ... so if your a fundamental trader you should know every single news of that country that will be released from the moment till next year ... also to be able to know the effect of that news on the pair ... you should know thae macroeconomics and to wich policy does each country use ... many things that if a newbie thinks about ... his brain might explode
let the chart to be your chauffeur ... -Forexmnstr-
  • #9
  • Dec 28, 2012 2:57am Dec 28, 2012 2:57am
Quoting the redlion
technicals and fundamentals...............look at a chart of Enron the tell me how a technical trader would have faired?

how about the housing market...i am sure technical traders didn't lose money.


fundamentals are the economic environment that affect transactions which are then plotted on a chart..................................it is odd how many so called traders don't know that a chart is just statistical analysis of price.
you mean statistical analysis of how that country are doing ... 2 countries for each pair ... price comes after fundamentals ... not fundamentals comes after price .
let the chart to be your chauffeur ... -Forexmnstr-
  • #10
  • Dec 28, 2012 8:26am Dec 28, 2012 8:26am
Price action/candlesticks with the technical’s is my main tool of analysis in terms of entering a trade as they provide the basic support and resistance points and the overall trend of the currency. I admit that the majority of my decision are based upon technical’s to see entry points.

As an intra-day trader however you have to be aware of the fundamentals and the overbearing impact of recent news on the market. Also its so easy for there to be a perfect technical setup, one that may even be going in your favour, to be totally blindsided by a surprising piece of economic news. Those Yen cross meltdowns are particularly painful esp when risk aversion kicks in L

Like already said you need a combination of the two although the fundamental analysis requires more understanding of the economies etc to interpret how to trade from this.
  • #11
  • Dec 29, 2012 12:16am Dec 29, 2012 12:16am
Yeah, know exactly what you mean.. we all thought Euro was going to head down the tubes since the Greek debt crisis but the opposite took place - here's the weird part, from the outset it seems that the big guys [IB markets] knew Eurozone would step in and floated it up..or so goes one of the trader conspiracies. That just shows you how crazy the fundamentals are, for starters, you need to have a good working knowledge of how the economic data translates, how the market will react and make an educated guess.
And if your trade goes wrong, you can always say that the big guys manipulated the market LOL
  • #12
  • Last Post: Dec 31, 2012 9:46am Dec 31, 2012 9:46am
the fact that kovner,soros,ptj,Bacon have admitted that its incredibly difficult to trade fundamentally since 2008 coz everything is determined by the feds,central banks and merkel...any statement from these guys changes the direction of the market drastically, this risk on/risk off scenario is damn hard for the macros to trade...look at how paulson fell from grace.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
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