Trade indicators: fundamental or technical analysis?

One of the key indicators for successful Forex trading is the correct forecasting of the forthcoming movement of prices on a given market.

Different strategies are used in trading. Some marketers follow patterns, while others follow various news to guide their decisions. But these strategies are still categorized if technical analysis or fundamental analysis is used. Some traders use fundamental analysis, some use technical analysis, some even use a combination of the two.

As a trader, it is important to know these two analyzes. This can help strengthen strategies that can further provide a steady profit for your account.

Technical analysis

Technical analysis is a methodology that predicts the direction of market prices by studying historical market data. This is one of the most common methods in trade. This analysis is very easy to learn and is well known to many traders, especially those who prefer daily trading. Many people think that this strategy is a kind of trade hack because of its high probability of making a profit.

This analysis uses various equations that apply to personal charts. These equations are known as indicators – data that measure market conditions to calculate economic trends. These indicators provide historical information about a specific market. It presents the history of price actions and price volumes in this market.

To use this analysis effectively, the trader must understand how to use various indicators such as relative strength index (RSI), moving average convergence-divergence (MACD), cash flow index (MFI), stochastics and many others. Profitable Forex traders often use many indicators when trading. These indicators illustrate historical data in a certain aspect. Despite its useful method, this analysis does not guarantee a 100% forecast of asset price movements.

Basic analysis

Like technical analysis, fundamental analysis tries to predict price movements in a particular market. One of the most popular traders who use fundamental analysis is Warren Buffett. Traders who are excellent at using this analysis argue that this methodology demonstrates a broader view of the forthcoming price movements in a given market.

When trading Forex, it is important to learn about fundamental analysis. This analysis presents key economic indicators of the market. It is also one of the vital factors in the analysis of the eight major currencies traded in the foreign exchange market (USD, EUR, GBP, AUD, CHF, JPY, ZAR and NZD).

Here are some fundamental analyzes that traders should always check: The Central Bank Interest Rate Decision, the Employment Reports, the Customer Price Index (CPI) and the Gross Domestic Product (GDP). These reports will always affect the price of the currency.

Another factor in using fundamental analysis is the economic calendar. This calendar shows upcoming economic events. As a trader, it is important to always be aware of global economic events. Being in the wrong position after an economic announcement is a trader’s biggest nightmare.

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