Hond Financial

Technical forces and fundamental forces are the two main drivers of the forex markets. They both give you valuable information but is one better than the other?

Technical forces are a reflection of fundamental analysis at the current market price. While fundamental forces include things such as money supply, interest rates, economic and financial reports, balance of trade data, and things of that nature.

Traditionally, fundamental analysis has been the default recommended method of trading. However this type of analysis takes a tremendous amount of time to do properly. Unless you have a few hours a day to devote to watching the markets, and know precisely what you are looking for, then it can be very difficult to do profitably.

For professional traders, this isn’t as much of an issue. Because they trade 24/7 and are always watching the markets, they are able to trade with the precise timing you need to move with the markets. This is why fundamental traders are never far from their trading platform and are always ready to trade.

Everyone else who doesn’t have the time to spend watching the markets is too far behind the action and ends up getting taken for a ride. To be successful you must be ready to react in an instant.

The key to understanding how fundamental analysis works is realizing that the underlying market data is NOT important. All you need to be concerned with is the market’s reaction to that data.

It’s important to note that most fundamental data is projected, meaning that the projections change based on the release of news or reports, rather than being created by them. What this means to fundamental traders is the timing of analysis is the most important thing and you profit due to the swing in market reaction.

Technical analysis, on the other hand, requires a lot less time and effort. It also allows you greater flexibility and mobility in the markets. Technical analysis, being based on fundamental analysis at the current market price, gives you a shortcut as all the fundamental work has been done for you by the market. You simply establish your trading conditions and ride the trend.

As you might have guessed, trend spotting is a crucial skill in technical analysis. Successful technical traders are able to identify, confirm and enter a trade with just a few key indicators. And they give themselves enough time in the trade to realize profit targets while identifying, confirming and exiting the trend before it comes to an end.

This is why I advise new traders (and pro’s alike) to trade based on technical analysis. You leverage all the hard work done by the fundamental traders without exposing yourself to the time, energy and effort required to do all the work. Because of this you can trade in just a few minutes each day and still make more money on a consistent basis.

If you want the best chances of success in forex, you should look for a Forex Training Course that uses technical analysis, such as the Forex Profit Accelerator.

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