eToro – Forex Trading Forum

[Forex101]

Hi everybody,
This time I am going to talk about the two main types of Trading
There are 2 basic types of analysis you can take when approaching the forex:
1. Fundamental analysis
2. Technical analysis.
Traders have been arguing for years which analysis is better, I believe you need to know a little bit of both. So let’s discuss them:
Fundamental Analysis
In Fundamental analysis is a you look at the market through economic, social and political forces that affect supply and demand. The idea behind this type of analysis is that if a country’s economy is doing well, their currency will also be doing well.
For (a really simplified) example, the U.S. dollar going down because the U.S. economy is in trouble, the sub-prime crisis is was quite frightening for some traders and that why the USD is at its current state. As the economy gets better, interest rates will get higher to control inflation and as a result, the value of the dollar will continue to increase
Later we will discuss specific announcements that can cause the market to move in several manners.
Technical Analysis/Charts
Technical analysis is the study of price movement . A person can look at historical price movements, and, based on the price action and identifying trends and patterns, determine at some level where the price will go.
There's a saying in Forex - “The trend is your friend”, that means that once you find a trend you have much better odds to make money in the same direction of the trend. That's why spotting trends is very important, and we will get to them.
So which type of analysis is better?
That depends on you, there are some who claim fundamentals alone drive the market and that any patterns found on a chart are simply coincidence, but there is also a very big portion of traders who argue say it's the technicals that call the shots.
The truth, like in any other field – is somewhere in the middle, Fundamentals and technical are connected and you cannot trade smartly without taking into consideration both of them.

I hope my posts are of good use to you all,
Successful trading

[annet1983]

thank you very much for your post , it did help to have a new look a t both methods and apply them in trading!

[xmenlawn]

Personally, i experimented with Technical analysis and went through a massive losses in my trade. Perhap im not trading in the right manner, this is what i did:

Buy when the trend reached its bottom, when the trend is pointing or increasing toward the peak.
Sell when the trend is at its peak and slowly decreasing.
Im using the MCDA chart advised by one of the eToro customer service, who was giving me tips and helping me. He taught me how to check the chart and the rest of the decision was made by me.

My question is how can i use this as my winning trade rather than lossing. Also i've noticed that when it comes to a trend that are already in the middle or half way up or down, its quite hard to analyse whether to buy or sell because it can head any direction.

[shaibanshezaan]

YES DEFINITELY BOTH FUNDTAMENTAL AND TECHNICAL ANALYSIS IS VERY IMPORTANT/

BUT IN MY VIEW AND I EXPERIENCED MOSTLY "Stochastic Oscillator" is 95% BEST TO MY KNOWLEDGE

SINCE ITS POINT 85 POINT LEVEL(OPEN SELL) AND 12 POINT LEVEL(OPEN BUY) TO DECIDE IN BETTER WAYS.

ITS 95% GOOD!!!

THANKS.......