Forex Trading - Should You Be Using Fundamental Analysis?


by Nathan Pennington - Date: 2007-02-07 - Word Count: 263 Share This!

It's funny that traders almost exclusively use technical analysis. That's funny because we all know that the real edge is with fundamental analysis. Right?

I mean after all technical analysis is just price and squiggly lines. And almost everybody is using the same squiggly lines. On the other hand over with the fundamental analysis, those guys are actually looking at what runs the market. They are sees the actual "why" the market moves where it does.

The truth is though that there is so much fundamental analysis (and misinformation) that sorting though it all fast enough is next to impossible for the small guy. So all of us technical traders can stare longingly at fundamental analysis, but the truth is it just won't work for the small guy.

And that forces us to use technical analysis. Since humans are naturally bad traders, we usually mess it up. In my experience, most traders attempt to over-simplify or over-complicate technical analysis.

You don't need 8 indicators on your chart. At the same time just using one moving average is going to be difficult. Don't forget those who are always clamoring for a new indicator, "to get an edge."

Actually you can use everyday common indicators to profit in your forex trading. It's like I said above, most forex trades aren't even using their indicators right. Believe it or not, there's plenty of profits in the market for the trader who knows how to use MACD, moving averages, CCI, etc correctly.

No need for neural nets. Save your money. Expensive new indicators use the same data as all other indicators (the price).


Related Tags: currency trading, forex trading, fundamental analysis, technical anaysis

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Nathan Pennington is a forex trader and the author of Winning Forex Trading -THE Definitive Guide

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