Technical or Fundamental Analyst?

Just would like to start a thread to divide the house:

What kind of trader are you, Technical or Fundamental Analyst?

As for me, I abide by technical analysis because it does not require many hours of study and one can follow many currencies at a time. Due to the overwhelming amount of data in the market, fundamentalists tend to specialize. Since the currency market tends to develop strong trends, technical analysis works well.

im technical because its pretty much how i was taught when i first started my trading education. anyone that is a trader or want to be a trader must start with technicals cause its easyier to work with. once you have mastered technicals then fundamentals just suppliments the knoweledge. its been 10 years since i started trading and its only now that im just begining to start to learn about fundamentals and from the lessons on baby pip and analying my personality ive just realized that i cant really stomach fundamentals cause i dont like the rush of having to work with volatility and quick movements. you need some guts to be a fundamental trader and you need to be free to sit around and wait for annoucements. most new traders probably have jobs (even if you work at home) and dont have time to sit around watching the clock. for a few dozen pips its not really worth it for me. fundamentals dont really change the moderate and long term markets too much. but if you are going to make a living out of trading then it would be worth your wild to learn and practice fundamentals.

in any case its a good idea to learn about fundamentals even if you are a technical trader. 10 years and im still learning.

I am Technical. Except that I may avoid major news releases. but seriously, rarely they will change the trend. sometimes they are excuses to buy or sell on a trend. and they say because of good news or bad news. But I do not believe in this typical trader note.

I have been reading many books on technicals and that is my preference. However, I have been following all of the major news announcements concerning the US Dollar just to have an idea how the currency reacts to it and I really like jumping on the bandwagon and riding the trend whenever possible. I also love those opportunities that present themselves when the dust settles after a news announement.

Technical here as well.

I totally agree with Churchille. no matter how you look at it - technical is way easier to learn and start with. I guess that Fundamental education is the difference between an experienced trader and an expert.

Honeb, if I may ask, you’ve been trading using ONLY technical for ten years? how have you been doing? if you tell me you’ve been successful (details would be appreciated :rolleyes: ), I’ll seriously consider learning only the basics of Fundamental and focusing almost entirely on my technical.

I use primarily technicals as well. But you don’t have to choose one or the other. There could be some reasonable combination. For instance, you could first start by looking for the best technical set-ups and then look at the fundamental factors surrounding that pair. If the overwhelming fundamental consensus is for shorting the dollar, then it may be a lower probability trade if your technical set-up suggests going long the dollar.

Bottom line: Look for your technical set-ups to be harmonious with the fundamental views and you give yourself a better scenario, i think.

i have been successful with only technical stuff but im not a successful trader at all. and knowing how to trade with both wouldnt have changed that kind of trader i was for the last 10 years. it wasnt my system that has failed me it was my lack of knowledge of the basics of trading in general. good traders have both technical and fundamentals under their belts. but you can easily get away with following one or the other and still be successful. i found that both technical and fundamental indicators have their moments. most people tend to prefer technical because the data is right there infront of you. there is little to interprete and everything is organized right there for you. its easy to learn how to read a graph then to understand economics. the whole purpose of graphing info is to make it easier to interprete which is why its usually the clear favorite tool .

with fundamentals you got to read and wait and read and wait… you need to wait for enough data to come in to decide whats happening for the long term and you have to move quick to capture movement in recent annoucements that affect the short term. it takes more effort to undertand, interprete and organize fundamental data.

im just learning the basics right now when it comes to fundamentals. i do this not because i have to but because it cant hurt me to know about the fundamentals. like i said before. knowing both doesnt automatically make you a better and more successful trader but it does give you an edge.

i am with you when it comes to knowing the basics of fundamentals but being a bit more exclusive with technicals. thats not a bad way to trade at all. there is no way you can equally incorperate both in your trading decisions anyways. personally i suppliment my lack of basic fundamental knowledge with reading reports from analysts. they do a good job of taking the data and summing everything up short and sweat. but nothing beats being able to do this for yourself.

It makes no sense to me to not follow fundamentals in the long term. I would think trade on technicals and invest on fundamentals would be a good axiom.

I am still learning the ropes! For me is all still new, but I�d say so far my experience is with technicals. It is so much that one have to learn! I think mybe I don�t have the stomach to go for it! But I am reading everything that comes into my hands. My goal is to feel more secure of all this within 6 months!

I am both a technical and fundamental trader, and I think as difficult as it may be to understand fundamental analysis, it may be worth it to improve your trading. I know there are a lot of traders who make a really good living by using strictly technical analysis, but the world’s best traders made their fortunes using fundamental analysis mostly.

If you read books about the world’s best traders who were interviewed, like “The New Market Wizards” and “Inside the House of Money,” you’ll see these guys studied fundamental situations and exploited them. A wealth of knowledge can be gained by reading these books just to study their thought processes.

I’m not saying everyone should switch to fundamental analysis only, but to avoid it because it’s difficult to learn and understand could mean missed out profits.

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

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.


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.

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.

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.