Technical or Fundamental Analyst? - Page 2
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  1. #11
    Join Date
    Dec 2006
    Posts
    440
    Well the more you know the better a trader you will be. doesn`t mean you have to be aware of every indicator or announcment out there, just aware of the ones that can and will move the market .. will help you keep your account intact

  2. #12
    Let's go to the basics. What moves the forex market? It's people's speculations that move the market! The news don't move the market, and the graphs don't move the market! It's people speculating on those news and people speculating on those graphs is what moves the forex market! When 9/11 happened, the dollar went down, not because 9/11 happened! The dollar went down because everyone thought that everyone else will be selling their dollars, so everyone sold the dollars, therefore the dollar went down. When a bunch of traders are looking at the graphs, and they see a head and shoulders pattern signifying that the EUR/USD pair will go down after the price breaks the neck line, EUR/USD doesn't plummet down because of that graph pattern! EUR/USD plummets down because everybody recognizes that pattern, and they think that everyone will go short on the Euro at the neck break, so everyone goes short, in hopes that everyone else will go short as well, and it creates this price effect!

    Here is the real question... How much money is traded based on fundamentals, and how much money is traded on the technical analysis? As far as I know, most big banks, hedge funds, and other big financial institutions trade mostly fundamentally. Obviously those financial institutions have most of world's money, so when they place their trades, the market moves accordingly. With fundamentals, it's pretty clear cut, if the report is better than expected for a specific country, that currency goes up, if it's worse, that currency goes down. What about technicals? It's pretty obvious that most of technical traders and individual traders don't have a whole lot of money, even altogether. It's also pretty obvious that there are more than 100 different indicators, and at any given time, some are showing up and others are showing down. How do you trade that? I guess look at the most popular indicators, and look for confluence of events, only sell when most of them show sell, or mostly buy when most of them show buy. And only do it, when there are no important news coming out. That's what Peter Bain teaches, and I think he is one of the very few mentors out there, who recognizes this confluence of events among popular indicators, and that's why he still produces traders that actually make money, using technical analysis. Most other technical analysis gurus, try to impress you with some fancy new indicator that they developed themselves, and obviously most people who trade with it lose money, simply because nobody else is using that indicator, so the market doesn't respect what that indicator says. I guess if you are still fascinated with technical analysis, you could still learn from Peter Bain, but I am personally so over it.

  3. #13
    Join Date
    Dec 2006
    Posts
    184
    Quote Originally Posted by forexcranium View Post
    Let's go to the basics. What moves the forex market? It's people's speculations that move the market! The news don't move the market, and the graphs don't move the market! It's people speculating on those news and people speculating on those graphs is what moves the forex market! When 9/11 happened, the dollar went down, not because 9/11 happened! The dollar went down because everyone thought that everyone else will be selling their dollars, so everyone sold the dollars, therefore the dollar went down. When a bunch of traders are looking at the graphs, and they see a head and shoulders pattern signifying that the EUR/USD pair will go down after the price breaks the neck line, EUR/USD doesn't plummet down because of that graph pattern! EUR/USD plummets down because everybody recognizes that pattern, and they think that everyone will go short on the Euro at the neck break, so everyone goes short, in hopes that everyone else will go short as well, and it creates this price effect!

    Here is the real question... How much money is traded based on fundamentals, and how much money is traded on the technical analysis? As far as I know, most big banks, hedge funds, and other big financial institutions trade mostly fundamentally. Obviously those financial institutions have most of world's money, so when they place their trades, the market moves accordingly. With fundamentals, it's pretty clear cut, if the report is better than expected for a specific country, that currency goes up, if it's worse, that currency goes down. What about technicals? It's pretty obvious that most of technical traders and individual traders don't have a whole lot of money, even altogether. It's also pretty obvious that there are more than 100 different indicators, and at any given time, some are showing up and others are showing down. How do you trade that? I guess look at the most popular indicators, and look for confluence of events, only sell when most of them show sell, or mostly buy when most of them show buy. And only do it, when there are no important news coming out. That's what Peter Bain teaches, and I think he is one of the very few mentors out there, who recognizes this confluence of events among popular indicators, and that's why he still produces traders that actually make money, using technical analysis. Most other technical analysis gurus, try to impress you with some fancy new indicator that they developed themselves, and obviously most people who trade with it lose money, simply because nobody else is using that indicator, so the market doesn't respect what that indicator says. I guess if you are still fascinated with technical analysis, you could still learn from Peter Bain, but I am personally so over it.
    Forexcranium,

    I definitley agree with alot of what you said. If using technical analysis and all those "amazing" indicators, we have to keep in mind that it's HOW you use them that will make you or lose you money. I don't believe a moving avarega cross over system will make you any money, but if you use moving averages to define trend direction, then you are on to something. It definitly is the confluence of technical events you should focus on. Alot of indicators out there just take the same information and mix it up differnetly to tell you the same thing. In other words, don't take an RSI indicator and wait for confirmation from Stochastics. It is a useless confluence because it is telling you the same thing, just calculated a little differently.

    However, if you take this confluence of events, you get something very worthwhile, i think: Trading in direction of major trend, price approaches major points of support/resistance coupled with divergence and OB/OS indicator, then you have a significant confluence of technical events. You have several different interpretations of the market all confirming the same thing. There is no single magic indicator that is going to reveal that much to you. But using several indicators/clues all lining up and confirming is very much like "magic". Don't forget to look at your analyis across a couple of time frames too.

  4. #14
    Join Date
    Dec 2014
    Location
    North Carolina
    Posts
    28
    I use both... Technicial analysis is the study of the charts, the charts represent what is known and expected about the market, the fundamentals are what is known and lead to what is expected so they are what is on the charts. Understanding the fundies is KEY and CRUCIAL to understanding what is on the charts. The charts are cold,dead and lifeless. The indicators give signals in either direction regardless of the fundies. An understanding of the fundamentals is, in 99.9% of the cases, the difference between a bearish and bullish signal. If the fundies say up there is no reason to think a market peak is a reversal, merely a stopping point along the way... the same is true in reverse and in range bound markets.

    I prefer to use only a few indicators, support/resistance, stochastic, MACD and a moving average. The stochastic is my favorite, its like an x-ray into the market and helps to reveal support/resistance and trend. . .

    this link is to my thread, on this forum, about my Stochastic Trend Following Strategy. Don't let the name fool you though, I use it for trend following entry, reversals, range trading, pull backs and a host of signals.

    Stochastic Trend Following Strategy

  5. #15
    Join Date
    Dec 2014
    Posts
    547
    Retail traders don't have huge funds, they have to trade with little amount of money so its better to trade mostly with technical trading.

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