Fundamental vs. Technical

Me_Lefty · Jan 11, 2008

Hi, everyone
i am graduating from school with economics deg. in macro. In school over 4 years non of the prof. talked about forex the only things that were mantioned spot, forward trade and triangle arbitrage in some of the finance classes. I was researching forex for 4 month now and it seems to me that economic indiacators, bond markets and all the fundamental reports are more usefull than technical analysis. If somebody can expand on this it would be greate. Also i would like to find out more on brokarages that are relalible because some people in the forum mantioned about 1-2 spreads instead of 3-5.
Thanks to everyone who will respond to this.

bigmrfrank · Jan 11, 2008

Quote from Me_Lefty:

Hi, everyone
i am graduating from school with economics deg. in macro. In school over 4 years non of the prof. talked about forex the only things that were mantioned spot, forward trade and triangle arbitrage in some of the finance classes. I was researching forex for 4 month now and it seems to me that economic indiacators, bond markets and all the fundamental reports are more usefull than technical analysis. If somebody can expand on this it would be greate. Also i would like to find out more on brokarages that are relalible because some people in the forum mantioned about 1-2 spreads instead of 3-5.
Thanks to everyone who will respond to this.

My simplistic answer is - while fundamentals drive FX and induce it's volatiliy, it adheres strongly to basic and advanced technical analysis.

drasfs · Jan 12, 2008

Fundamental= the long term trend
technical= the wawes around the long term trend.

Techical trading works becasue many other use it. One illustration of that is, pivot points. If no one had believed in it, these critical points wouldnt have appeared.

Batman28 · Jan 12, 2008

Quote from Me_Lefty:

Hi, everyone
i am graduating from school with economics deg. in macro. In school over 4 years non of the prof. talked about forex the only things that were mantioned spot, forward trade and triangle arbitrage in some of the finance classes. I was researching forex for 4 month now and it seems to me that economic indiacators, bond markets and all the fundamental reports are more usefull than technical analysis. If somebody can expand on this it would be greate. Also i would like to find out more on brokarages that are relalible because some people in the forum mantioned about 1-2 spreads instead of 3-5.
Thanks to everyone who will respond to this.

if you have a econ degree and understand the indicators then use it. most people find it difficult to understand monetary policy nevermind industrial figures. technical analysis appeals to them because they just have to look at a chart without knowing anything. TA has no value and it does not work. it only appears to work because statistically anything works in the market short term - but it dont mean because you have a working strategy. some people even trade the moon for god sakes.

the best thing you can do is look at the longest running traders who have survived. youd' notice they're either 1. go by fundaments 2. manipulators. 3. inside trade/front run 4. stat arbs.

TA is a gimmick that sells really well to retail traders. trouble is most of them lack financial education and find hardcore stat/econ study boring and it doesn't sell well. the best selling trading books are the most basic. the true gems are the most difficult to grasp ideas.

drasfs · Jan 12, 2008

Quote from Batman28:

the best selling trading books are the most basic. the true gems are the most difficult to grasp ideas.

I would really appreciate if you could recommend me on some true gems?

Im looking for some heavy book, giving you a deep understanding about the fundamentals. All the books ive ordered, just barely scrap on it.

cabletrader · Jan 12, 2008

Quote from Batman28:

if you have a econ degree and understand the indicators then use it. most people find it difficult to understand monetary policy nevermind industrial figures. technical analysis appeals to them because they just have to look at a chart without knowing anything. TA has no value and it does not work. it only appears to work because statistically anything works in the market short term - but it dont mean because you have a working strategy. some people even trade the moon for god sakes.

the best thing you can do is look at the longest running traders who have survived. youd' notice they're either 1. go by fundaments 2. manipulators. 3. inside trade/front run 4. stat arbs.

TA is a gimmick that sells really well to retail traders. trouble is most of them lack financial education and find hardcore stat/econ study boring and it doesn't sell well. the best selling trading books are the most basic. the true gems are the most difficult to grasp ideas.

Fundamentals are no better/worse than technicals, just as many (if not more) economists and respected market analysts disagree on direction as technicians disagree!

As bigmrfrank said, although fundamentals steer the market, price respects technical levels. Both are tradeable, both are subjective (if anything technicals are less so).

To say TA is a gimmick that has no value and does not work is not only incorrect it's also extremely narrow-minded!

Batman28 · Jan 12, 2008

Quote from drasfs:

I would really appreciate if you could recommend me on some true gems?

Im looking for some heavy book, giving you a deep understanding about the fundamentals. All the books ive ordered, just barely scrap on it.

it depends what your strengths are and what approach u like taking toward the market. but b4 you start on ANYTHING you should get a copy of Security analysis - Graham and Dodd. & anything covering all basic indicators like Atlas of Economic Indicators - Carnes n slifer is good for beginners..

Me_Lefty · Jan 12, 2008

You are right there are no books on fundamentals that will tell you if xxx economical index will increase/decrease then exchange rate will go up/down by so much and the reason because there might be another 5 different factors that can influence the index or any economical news in that matter.

If you want to understand fudamentals you have to start from I would say the basic fundamentals for fx are The Liquidity Preference Theory (Keynesian theory) and different effects on it, Milton Friedman's money supply, monetary and fiscal policies as well as Purchasing Power Parity Theory.

This should give basic understanding of different movements in exchange rate

Me_Lefty · Jan 12, 2008

Quote from cabletrader:

As bigmrfrank said, although fundamentals steer the market, price respects technical levels. Both are tradeable, both are subjective (if anything technicals are less so).

I see that you prefer technical more. Is that because u have more experience with technical? Did u ever looked into fundamentals?
Just want to see your opinion

DrEvil · Jan 12, 2008

Quote from cabletrader:

Fundamentals are no better/worse than technicals, just as many (if not more) economists and respected market analysts disagree on direction as technicians disagree!

As bigmrfrank said, although fundamentals steer the market, price respects technical levels. Both are tradeable, both are subjective (if anything technicals are less so).

To say TA is a gimmick that has no value and does not work is not only incorrect it's also extremely narrow-minded!

As I recall, in Market Wizards it was shown that the most successful traders use fundamentals exclusively, technicals exclusively or they combine fundamentals and technicals. In other words, fundamentals and technicals are merely tools, which in the hands of a GOOD trader can be used to great effect.