How to Win as a Forex Trader

Here is introduction to Forex market analysis tutorial.

The primary question on the minds of all Forex traders is how to analyze the market, to take the right trades and make money. Take the right approach and you win, take the wrong one and you are losing. But which is right technical or fundamental? First let us define our terms.

Forex Technical vs Fundamental Analysis

Technical analysis means using the raw data of the currency market (Open Close High Low prices) in various mathematical formulas to generate lines on the graphs that will show where prices have been and where they may be expected to go in the future.

Fundamental analysis means using the news and economic reports that influence the currency market to indicate where the currency pair you are trading may be expected to go.

Which is right? Both! But you have to blend the use of them with common sense.

In the bigger picture banks with huge accounts can more easily trade using fundamental analysis, because they can withstand the market going against what the fundamentals say should be happening for a longer time betting the fundamental reality finally will assert itself on the currency pair.

In the smaller picture those with accounts that are not so huge need to be able to quantify the market more closely and manage their account more carefully and technical analysis becomes far more important.

And then there is the matter of truth, the fundamentals while not outright lies, can be leaked ahead of time, manipulated to suit some purposes before release and then revised later. Technical data cannot lie, the currency is that price at that time and that is it, it is not going to change later, what you see is what you get. There is some security in this.

And there is the matter of market mind set, the graphs on the chart of technical analysis shows the market psyche in action, the fear and greed are all painted there before you on the indicator lines on your graph. Price came to a high point and then fell off, why? People saw it had been that high before and fell off, so they become afraid and sell and so it falls off again. It comes to a low and goes up, why? People saw that it had been there before and went up so their greed makes them buy, and so it goes up again. There is a high degree of self fulfilling prophecy in the charts and the indicators.

But I said both approaches are right technical and fundamental. And you must blend them. In the next article we will explore this further. In the mean time, go look at some charts, and pull up Forex Factory and look at some fundamentals. See how they compare!

All the best,
Phil