technical analysis -or- fundamental analysis

Excellent thread title sums all up! Couldn't have said it better myself.

I believe for trading (especially short term), study fundamental is a waste of time (sorry for the hush comment), all truth and fact is built in the price regardless what fundamental might tell you.

A lot of sense to completely ignore what is generally referred to as "fundamentals". First it is already clear from reading the posts prior that there is no known formal methodology to applying analysis and or derive predictions from what is - essentially an exercise in conjecture. Second, the idea stems from stocks where there is in fact methodology established for assessing a company's true worth - with clear predictions for outcomes. Whether it works or not I do not know as I do not trade stocks or follow individual company quotes - but I am an MBA and learnt and applied the understanding to gain my degree.

However, when it comes to the Forex and presumably some other electronically traded markets - I can say this. First, you are taught in business school that formal economic theories of Forex rate determination do not as rule explain the way the market moves and are poor predictors of price. In addition, all empirical research available say "fundamentals" is a zero predictor of price in the time span that most people wish to realize profit/loss. Third, professional economists - trained in macroeconomic analysis would fare no better than a newbie in using the so-called fundamental approach - meaning it does not directly provide an edge as it does not in fact exist in any useful form for trading. I could go on and on - but suffice it to say it is probably more useful to focus on trading technicals.

However, that is not to say news and views about economic developments are useless. Far from it - they are useful in keeping one up to date with actual events potentially affecting the market. But to then claim that somehow these can be analysed in a way that would predict price and or that they are what guide price action is to falsify reality.

Markets are driven by sentiment and orderflow. Psychology is a huge part of this learn how speculators position themselves for certain events ussually happens days or weeks before. They expect something from a meeting policy statement etc. Trading raw nrs is different Follow the psychology of the market and traders. When the dollar getting sliced for breakfast it isnt so wise to fade every ressistance same goes visa versa. So it it more the mindset then just trading raw nrs. I think that is 1 of the biggest problems most traders face when looking at fundamentals. Allwel on macro view those nrs also show some certain trend.But macro trends dont reverse easy there need to be lot done to flip a macrotrend in a currencie the nrs intraday most is just basiclly noise and thats why imo lot of traders who anticipate the wrong way on this get fucked. Will the bigger guys use that bad or good news add to there positions as the macro trend is still intact. Will the people who dont understand it why the fuck it whent up or down again the news was bad. Then they come with some stupid gartley pattern or whatever and show after fact you see it was because there was a triangle or girrafe on my chart. Not taht technicals not are effective in the markets but imo on a relativly simple basis. Not the most mumbo jumbo you see around everywhere. Is in my experience all crap simple stuff for charting clean charts otherwise you get overanalysed. Now i would spend more time to see what the sentiment is or whats on the menu where specualtors might look at. Then figuring out hours behind the charts where to enter what indies are doing if there is a donkey pattern and all that other crap.. If you really get sentiment etc right you sometimes could even trade without charts. There was a reading in the book from Jack Scwager from Bill Lipschutz. The sultan of currencies verry good read 1 thing he sayed read read till ya eyes bleed. But i think most comes to human psychology most people in here want it easy and are not willing to do work they look for somekind of magic well thats how it always is in life also. Those people complain about rich people and in the meantime they stick to there regular life and regular job because they not willing to invest time etc to become more educated or whatever. Then they complain well i have no cash where is a will there is a way they can choose to do 2 jobs or whatever. But enough rambling this just my view ...

Regards Ingmar..

I think you are spot on - if I had known you were coming up with this would not have bothered with mine. Wish more people would have read this though - so tired of guys not understanding it is sentiment and orderflow and also as you said reading the news and "fundamentals" to gain a picture of market psychology. Mostly in the stream you get complaints such as - manipulation, etc so annoying really. But cheers and good luck - you are very sound in your thinking and obviously a very experienced trader.

Good advice Loadedgun. Its nice to have real knowledgeable people here to observe.

I don't pretend to be a knowledgeable trader like Loadedgun and for those reading this thread, I do not know Loadedgun, nor have I ever communicated directly with him/her. I consider myself a student still learning at a very elementary stage, and from my own personal experience, when I look at the news, I see very little if no correlation to price action, save for a few very short-lived jumps here and there.

Case in point:
Sept 6: ADP Non-Farm Employment Change, the EURUSD experienced a short, one hour 80 pip drop after which the EURUSD rocketed north. I watched as the price dropped and rose very quickly - I had a 2 part trade in my demo account, and the first part made 42 pips. Anyone expecting any long term effect from this news would be very disappointed. After I made my 42 pips, on the second half of my trade I got stopped out with a 20 pip loss. In my real account, I am still riding the upward surge, based solely upon technical analysis (Elliot waves).

Why am I writing this? Well, I have read many books, and participated in courses teaching methods of trading FX and not one has indicated any consistent or reliable method of predicting price action in FX based on the news. On the contrary, those that I would consider credible teach technical analysis, period.

For all the newbies like me, you are wise to study the market closely and by study I mean read these threads carefully, read all that you can from those that are truly knowledgeable and successful in this market. The FX market is clearly very different from other markets so attempting to apply techniques stemming from other markets (such as the stock market) is futile.

Keep in mind, that not all those teaching how to trade FX know how to make money in this market. Some probably do. Many do not.

From my personal experience, fundamentals will fake you out consistently, technical and sentiment analysis on the other hand seem to paint a consistently accurate picture of what the buyers and sellers are actually doing.

No, I don't think so,
Fundamental analysis is based on important news and data comes from the news. It has it's own importance.

On the other hand, Technical analysis is the price change in term of historical value or analyzing statistics generated by market activity, such as past prices and volume. It use charts and other tools to identify patterns that can suggest future activity.

Traders do both analysis while trading & both analysis goes together.

I always believed that TA was the 2 pathways for price to travel and fundamentals where the driving force just like today on the GU with GDP positive figures the technicals said it was bearish. Also, COT showed many contract taken off by the large traders.

The US dollar was down against the Japanese Yen on Friday. At the end of the trading session USD/JPY was trading at 102.48, shedding 0.73%.

USD/JPY: Key levels to watch for Monday:
Support: 101,37;
Resistance: 103,39.

You can certainly do it with one or the other, I know many technical analysts who are only looking at the charts and they feel that is all they need, and the fundamentalists are not even looking at charts, both parties seem to hate each others ideas about how to trade the market, and they both feel the other one is wrong. but in my opinion they are both right, the best results is when both TA and Fundamentals are used, to trade a pattern of the charts and not knowing why it brakes upwards or downwards is one thing,
sure, that can work to, but to know why it does it, gives you so much more confidence and higher probability trades. sure, the fundamentals could already be priced in as the TA guys claim, but if you don't know what is driving the market, you don't.

I trade fundamentals technically. Where I analyse fundamentals for direction and use technicals for entry/exit.

best short answer here.Agree 100% and basically what I do.
What lot of idiots do who are oblivious about fundamentals is trade direction of PA right before a rate decision then find themselves 300pips in the hole.
That could of been easily avoided if one simply paid attention to major news events which are fundamentals!! US unemployment claims? CPI? Earnings? GDP? Crude price on CAD? or iron ore on AUD? list goes on.Only total moron will ignore all these and expect to make money in Forex.Guess what you won't!

The US dollar remarked modest decrease against the Japanese Yen on Monday. The pair remained almost unchanged and lost only 7 pips. The graphics continue to develop under moving averages, while the index of relative strength remain on neutral territory. The outlook remains neutral in the short term, levels at 101.20 and 103.70 retain their key role.

The US dollar recorded solid growth versus the yen on Monday, broke a six-day negative series and nearly recouping its losses. The dollar added almost 220 pips to a closing price of 102.77 after trading in the 102.88 and 100.52. Price overcame the mean values and the index of relative strength added significant positions, suggesting additional gains.

On Tuesday, the dollar falls against other major currencies as investors shifted attention to the forthcoming meeting of global central banks on expectations of additional stimulus measures from their side.
USD/JPY pair rose to 104.89, the highest value since June 24.

Trading sentiments for the pair USD/JPY today: to buy above 103.60 with targets 105.30 and 106.10 points. Alternative scenario: The downside breakout of 103.60 will open the way to 102.85 and 102.45.

I've always wondered why we no one has come up with a true leading indicator based on market sentiment and trade volume. For example, if we knew (in real time) that a total of EUR 1.2B was currently being traded in the EUR/JPY market and we also knew that 80% of those traders were bullish, we would know for sure that the price will rise because the weight of money in that moment wants to buy.

Why does this not exist?

There are real time sentiment charts but they're never married with real time traded dollars (or Euros etc).

Thoughts?

Fundamentals and Data ... are just That!

what really mathers is how the market acts/reacts on that piece of information.. what really drives price... are executions or a lack thereof , transactions drive price NOT numbers on a piece of paper...


Price Action > Fundamentals

totally true. that's all the more reason why I ask the question before relating to actual live money transactions (see two posts above).

but you're right, what we are doing is trying to predict what everyone else will do... That's the game!

trading with technical analysis alone is like driving a car using the rear mirror alone. Fundamentals allow u see what actually move the market then u can use technical to know ur entry and exit points. overall, both techniques should be adopted. and i will say 80 percent fundamental and 20 percent technical.