Technical Vrs Fundamental Trading
There are two different strategies to trading the forex markets that are very different from each other. Technical analysis and fundamental analysis. Although most of the strategies taught by FxCenter.com are considered technical analysis, there is a lot of merit in understanding both strategies.
Technical Analysis
Technical analysis traders take trades based on the information provided to them by the charts. They consider trends, past performance, candlestick formations, resistance and support and other mathmatical equations and build a case for why to or why not to make a trade. Although technical traders do take into consideration when a fundamental economic announcement might be released in order to time market entry, for the most part they assume that the state of a countries economy, political stability, and currency demand is already reflected in the charts.
Fundamental Analysis
On the other hand, fundamental traders consider economic data, political stability, supply and demand, and current events and base their entry and exit strategies off of that information. Instead of spending their time working with and analysing charts, fundamental traders study economic reports and stay in tune with global news. There are hundreds of economic reports released from many countries on a daily basis. The chart below shows a list of several of these reports.
- Employment Growth
- Interest Rate decisions
- Trade Balance
- Gross Domestic Product
- Retail Sales
- Durable Goods
- Inflation reports (Consumer Price Index and Producer Price Index)
- Foreign Purchases report (TIC Data)
- IFO Index
- Import prices
- Industrial production
- Industrial Production and Capacity Utilization
- Initial Claims
- International Trade
- ISM Manufacturing Index
- ISM Nonmanufacturing Survey
- ISM Services Index