Forex Basics: Fundamental Versus Technical Analysis

[forexrules]

Fundamental analysis involves examining the movement of currencies in relation to international political and economic events, present and past. This technique requires a lot of data and much more than forex basics to make sense out of it. Fundamental analysis does not help with entry or exit points either. These days, most forex trading education websites seem to advocate technical analysis over fundamental analysis. Technical analysis takes actual currency fluctuation into account as opposed to the forces that affect currency rates. Nevertheless, some traders choose to combine both techniques.

[priya11]

Hi there,

Fundamental analysis is a method of forecasting value based on social, economic, political and environmental factors. Fundamentalist draw their conclusions on the basis of company’s financial balance sheet, past performances, income statement, goodwill, market share, profitability etc. This type of approach is mainly used for long term investment. Technical Analysis is made using charts, price trends, and daily/weekly reports. This type of approach is used for short term investment and slightly speculative, which means it simply suggests you to go which price trends.

My favorite is technical analysis as the form of my trading is intra-day. As a small investor, I purchase stock daily at low price and sell it at high. That’s how I book my profit everyday. I use the price trend charts, moving averages and relative strength to find the stock value and maximize my profit. With the help of price charts we can prepare Support/ Resistance level for getting buy/sell signal, which is very helpful for trading wisely.

Both TA and FA tools can be used to draw conclusion based on trader’s specification. This way, as per the choice of the trader and trading techniques adopted, any of the approach can be used for stock analysis. Both fetches reliable results and opens new path to success.

Cheers

[richemarks]

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