Technical And Fundamental Analysis : Which Forex Trading Technique Is Greater?

Foreign currency trading is classified mainly in two major kinds of trading: Technical analysis and Fundamental analysis. Most traders focus exclusively in technical trading, which is based on the analysis of price performance and chart patterns. While, Fundamental analysis or Forex news trading is the analysis of the economic news events to take advantage of the movement and volatility that comes after the news, particularly when there is a surprise in the news release numbers. The bottom line is, fundamental analysis considers the economic news events when technical analysis looks at charts and indicators. Almost all Forex traders focus on technical analysis, but it's also wise to understand more about fundamental analysis in order to be conscious of the news and consistently be more profitable using both methods.

By far the most significant tool and info that you will need to trade the news is to have access to a Forex calendar. A Forex calendar is designed to notify traders about important upcoming global financial news reports, such as Gross Domestic Produc t( GDP ), Consumer Price Index (CPI), Retail Sales, and Unemployment figures. A country's monetary status will certainly be a major indicator of the value of its currency. Hence, a nation with a healthy and strong economy will have a strong currency, while the currency of an ailing economy will be weak. Traders can use this tool to assess their position in coming trades and make selections whether or not they should enter or exit a trade.

A significant part of fundamental analysis should be to keep track of the high impact reports, especially those currencies that you regularly trade. The net is normally the easiest way to gain access to a Forex calendar. However, numerous cost-free Forex calendars may have a few seconds delay in displaying the release; so seasoned traders focused on news trading may choose to use a video or news wire service which will alert them on the news report numbers soon after its release. It is vital when you are trading the initial market spike, especially when the actual news release is above or below market expectation.

Almost all Forex calendars will show the type of impact of a particular news event: high, medium, or low impact. Fundamental analysis traders often aim primarily in the high impact news, such as U. S. Non- Farm Payroll, Interest Rates, Manufacturing and Service PMIs, and Unemployment rates.

One highly recommended web site which specializes in Fundamental analysis trading is CurrencyNewsTrading. com. Experienced Currency trader and coach Henry Liu is not merely an authority in fundamental analysis, but also offers technical analysis and market sentiment. The site features numerous free ideas, market headlines, market analysis, and guides in news trading. What's more, it includes a well-rounded Forex calendar that focuses only on the high impact news which are tradable and also have historically moved the market.

Even if you're simply a technical trader, it is impossible to ignore the economic news events; at the minimum you will have to check the upcoming high impact reports to prevent trading during these times of high market volatility. Many beginner Forex traders come to a rude awakening of the importance of these news events only after seeing a perfectly successful trade turned into a loss in just mere seconds. By including fundamental analysis in your Forex trading, you will possess all of the available skills and knowledge to make more informed predictions; that's why, you'll be able to reduce your risks and make a lot more consistent profits.