Monday, March 17, 2008

Fundamental Vs Technical

There are two types of traders in the forex market namely the technical and fundamental traders. Some traders are a little more extreme to believe that one is better than the other or vice versa. The fact is none better than the as both have its own flaws in the system.

The Fundamental Traders

They relied on the economic data such as trade balance, interest rates, non-farm payrolls, etc to predict the future directions of the forex market movement (read more on fundamental of forex fundamental). Usually their success will come only if they trade the long-term of the market direction. This is because it takes sometimes for any economic data to take effects. There are short-term effects though, but it is highly unpredictable.

Source: ForexFactory.com

The Technical Traders


Technical traders relied heavily on indicators and also the physical patterns of the market movement such as Bollinger Bands, Slow Stochastic, MACD, Trend, etc. Short-term traders are usually very keen on using it because they want precision within short time period. Although they cannot predict precisely the market movement, moving average is used to estimate the average size of the market. Thus using the average they can determine the boundary limit of movement called support and resistance level.

Source: FxStreet.com

Summary


In summary both technical and fundamental are equally reliable as well as flawed. Our objectives to study them both is to increase reliability and reduce the flawed of a system that we are using in trading. And for those extremist who claimed that one system better than the other because they are fanatic of their own system without analyzing others.

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