hello everyone,
i’m a new trader, and so far i’ve been focusing on and learning about pretty much just technical analysis
ive had very little success, and i know im just one case, but does pure technical analysis even work?
is fundamental better? or hybrid or something
thanks!
No forex information sources are more important than the other. Long term you will need a combo of Tech, fundamental and trader sentiment analysis so you can use the information gained from each source combined to fuel your trading method that will give you more positive results long term than negative.
In the beginning all this information sprung on you can be overwhelming. So you need to take it slow, start with the basics learn and practice. If there’s something you don’t understand post and traders who have already been where you are now, will help you. It’s hard to believe that six months from now, the information and concepts you’re having trouble with will come to you much easier.
If you haven’t went through baby pips school yet that would be your first stop. While you’re learning and practicing, current work and family situation, money you will budget and the time you have for trading. Write it all down. If you have trouble, post it in a thread and you should gets some help. Keep in mind how you start today is not how you have to and will likely not finish down the road. Good Luck
Gp
Hi Grizz,
For me (and take everyone’s opinion as personal, what works for some won’t necessarily work for others), technical is more suited to a shorter timeframe where price is moving uninterrupted by news events. Fundamental is more applicable to the long term time frame.
As an example last year with Shinzo Abe decided to devalue the Yen, this set off a year long trend. But on the shorter time frame, you could still use technicals.
GP pretty much summed it all. I find if you trade higher TFs it’s good to have little bit of everything integrated into your analysis: Fundamentals , technicals and sentiment. But if you’re more of a scalper or trade on 1h and lower TFs I guess you can do well with technicals only.
I agree. I found trading in the shorter time frames it’s better to depend more on tech analysis. In the long run you do need tech fundamental and trader sentiment analysis to maximum profit potential . Personally I don’t do my own fundamental analysis, I rely on other sources to supply me with the bottom line. Then what I do is analyze all the bottom lines. For example I subscribe to pipnoculars blog Pipnoculars | Forex Blog: Daily Economic Commentary & FX Analysis and get a nice recap at the end of each session, and the morning recap of London session when the New York session opens. Another free source is Forex factory currency news.
I disagree strongly on this one.
When scalping on faster time frames you need to be incredibly more aware of event risk, even-more-so than on slower charts.
You typically wouldn’t be scalping with a 20 pip stop- on average I think we’d agree that a scalp target is typically anywhere from 3-10 points (10 being on the way high side).
In order to remain profitable, you’d need to utilize a stop @ least 1x the distance of your target.
So, if your average scalp target is 6 points, you’d be wise to use @ least a 6 point stop (especially if you’re trading a more volatile pair).
News releases hit the wire every single day which could move a minute chart quickly 3, 4, 5, 6 points in one direction.
In other words, when your scalping, we all know, it’s quite easily to get whipped out of a position (you enter the market, the market takes out your stop, then, retraces back through your entry and hits your original limit order).
In my view, the scalper who pays little-to-no attention to fundamental releases due up on the wire, isn’t taking into account all of the required information to make an informed trading decision and is unnecessarily exposing their capital.
Sorry my fault I should have clarified and said, I don’t label trade strategies or traders as scalp, day or position trades or traders. I am a trader who trades opportunity. My trades are not based on picking up 10 pips with some fixed stop loss, no more than doing the same process on a daily time or whatever time frame. I don’t trade 30 minutes before or after a major economic event on the pair I’m considering. If there are several events same rules 30 minutes after they’re done.
I don’t trade for 30 minutes after the overlap of the London NY open. I look at all the hard information to assess whether I’m trading or not. My trades are based on a % of my account balance. My goal is to use all the relevant information available before I trade to see a possible entry, stop loss and take profit or profits and what’s the chances on the balance of probabilities that I will hit a profit target before the stop loss. Then I decide to trade or not to trade.
Your exactly right when you say news events can move a chart 3+ as well as 100+ points, that’s why I wait until there finished and before the next daily round of news events. In my opinion if you take into consideration an upcoming event, before you see the results, you’re not taking into account the results of the event, just the event. How many times to we hear I don’t understand how can the pair go this way when the forecast prior to the event was this. Or strong numbers recently released from the US have rallied the dollar, LLater today the xyz event is due for release and based on a survey of 26 economists the dollar should continue to rally and it does right after professional traders unloaded stopping your trade out. Again my opinion.
A good rule of thumb for me is to use fundamental analysis for direction and technical analysis for entry/exit/invalidation levels. This applies across different time frames. For example, your fundamental analysis could focus on monetary policies and interest rates (long-term) or news reports, speeches, etc (short-term). You’ll eventually get your balance and go-to sources when you’ve had enough practice.
Hello Grizz,
Many years ago as a student my instructor told me that "Fundamentals will always accelerate what the technical are showing already’’ and they do. In my experience focus on Tech analysis keeping in mind that fundamental releases will accelerate the markets soon or later.
I trade from the perspective that technical trading works within the fundamental picture. No amount of support or resistance levels are going to stop the market moving if big news changes the fundamental outlook.