FAP Turbo Forex Blog

There are two primary forces that drive forex markets: Fundamental forces and Technical forces. Each can be used to evaluate and select potential trades, but what is the difference and which is best?

Fundamental forces include things such as interest rates, balance of trade data, economic and financial reports, money supply etc. Technical forces on the other hand are simply a reflection of the fundamental analysis at the current market price.

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.

The main problem with fundamental analysis is that because you need precise timing to move with the markets, you must always be “on”. Successful fundamental traders have usually made trading an integral part of their lives and they are never far from their trading platform — when a news story hits they are ready to trade.

Amateur traders on the other hand don’t usually have the many hours required on a daily basis to watch the markets and react in time. When they do try to trade using fundamental analysis they often get taken for a ride as they are simply too far behind the market to realize profits. 

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.

One thing many traders don’t realize is fundamental data is projected — and those projections change when news reports come out, but they are NOT created by the news reports. It’s a small distinction but one with far reaching meaning. It makes the timing of analysis the most important thing, and it means you profit from the swing in market direction.

However, trading on technical analysis requires much less time involvement and gives you flexibility, maneuverability and agility in the markets. Because technical analysis reflects the fundamental analysis at the current market price, that means the market has done the fundamental work for you. You literally skip ahead and let everyone else do the hard work. You then ride a trend based on your trading conditions.

The key to technical analysis is trend spotting — to be successful you need to identify, confirm and enter a trend while giving yourself enough time in the trend to realize your profit targets. At the other end of the trade, your technical analysis must also identify, confirm and tell you when to exit a trend when the trend is coming 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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