subject: Fundamental Analysis vs Technical Analysis [print this page] Fundamental Analysis vs Technical Analysis
In the Forex trading market, and in general for any trading activities, the study of markets is through the use of technical analysis and fundamental. Some traders only or specialize in either, although it would be preferable to joint use.Technical analysis is not a science but an art, it is also based on some mathematical considerations, no one can guarantee that a certain behavior that occurred in the past may also occur in the future, it would be better to talk in terms probabilistic, as a particular movement more or less probable than another, without eliminating the risk and the possibility of error. The analysis technique uses the study of graphs, to determine their decisions to buy or sell. The basis of technical analysis, there are the prices and volumes in the past, you study the charts, along with other instruments such as indicators, to identify future market trends, as the market will move in line with what has happened in past, most likely.
The main difference between the fundamental analysis and technical analysis is simple: fundamental analysis studies the intrinsic value of a financial instrument, an action, a portion of a company with a market of a particular economy, going to use indicators synthetic currencies in the case of the GDP, the unemployment rate, inflation, the level of interest rates, real estate, imports and exports, retail sales, consumer confidence etc.. Instead, the analysis technique is based on historical figures of the market, with the belief that identical training graphics should generate the same movement in the past and future prices. As I said before, it is true that certain chart formations are repeated, but never 100%, since during the hours of negotiations might be involved in other variables, including fundamental analysis, which may stop training graphics, leading to a different result.
Among the flood of small traders fundamental analysis is very underrated, but for the Forex market professional traders agree that fundamental analysis can make a difference. It sometimes happens that an abnormal movement in the terms of technical analysis, can only be explained by the study of fundamental analysis.
