Is fundamental analysis less important than technical analysis in forex?

L

learner88

Forex is very difficult to analyze using fundamental analysis compared to stocks. There are too many movable parts in a country's economy. For companies, financial statements are much easier to analyze and the data collected is probably more accurate.

Since fundamental analysis is near-impossible, should focus be placed mostly on technical analysis for forex?

I have negligible experience in forex. Just sharing my thoughts.

Do institutional forex traders use primarily fundamental or technical analysis?
 
Markets (stock/forex) are so complex with many moving pieces, often hidden pieces & hidden risks that it is nearly impossible to properly analyze using even the popular 'fundamental analysis'.

Technical analysis is pure pseudoscience. If you're aware of an indicator without revealing such indicator to the public then I'd believe in it so long as it tested positively over large samples. Once the indicator(s) made known to the public, it becomes a self-fulfilling prophecy.

Also, it isn't one or the other. As a trader, it's not like you have to pick between technical and fundamental. Theres other ways to make trades not just technical and/or fundamental.

Find your edge, find its probability of payoff and payoff amount, start with small amount and adjust via trial and error to find correct position sizing (Kelly Criterion/Half-Kelly). It ain't easy... at all.

And always hedge against risk of ruin.

Every sustainably profitable forex trader has their edge. Finding yours should be your mission. Until then, you're gambling/throwing darts blindly. As always, hedge against risk of ruin. To play, you must first survive.

Peace
Amahrix
 
If you're long-term trading, using a trend-following strategy in forex, there is very little FA you need to do to minimise risk or find an opportunity. You can see central bank rate announcements and committee member presentations and inflation/unemployment reports coming up on the calendar for each currency, but there is little basis for not taking up such a position in advance of these.

Yes, surprise events can cause trends to halt or even reverse, so you always need risk management in place. But forget about 10,000 hours of studying economics to be a forex trader, not worth the time.
 
Both are important. The way you play it is Fundamental. Once that is in place you do Technical. If Fundamental changes then you have to change.

Technical more day to day. Fundamental - Long term + one day shock.
 
Ayn Rand said:
Both are important. The way you play it is Fundamental. Once that is in place you do Technical. If Fundamental changes then you have to change.

Technical more day to day. Fundamental - Long term + one day shock.
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Well said! both have their own importance. Combination of technical and fundamentals is the best way to trade effectively.
 
For me both analysis are having their own pros and always follow it with discipline so that I can give my best to my trading with my LMFX account.
 
This is a quote from quora on how you can combine both:

1. Open the H1 time frame currency pair you want to trade and do your technical analysis to come up to the decision of whether you are going UP or DOWN

2. Visit Forexlive or forexfactory to see what had happened with the 2 currencies in the near past (a couple of weeks). Like if you are trading EUR/USD. Look at what happened with EUR and USD in last couple of weeks. If the last major news is GREEN(Stronger EUR means go long(buy) EUR/USD), and USD showed weakness in the last major news (Weaker USD means go long in EUR/USD) AND your technical analysis tells you that the price is reaching a support, then that is likely to be a very good trade. One more important point. If your technical analysis is based on lagging indicators, you are more likely to misjudge the whole market. Learn VSA since it tells you all about the imbalances of Supply and Demand. Combine it with important price levels and trust me, you will tell 1 hour before the news what will be the impact of the news and to what extent.
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CFerret said:
Pure TA didn't work for me. Combo of fundamental strategy + TA for timing is better.
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This is what every expert does. You can't rely on Technical analysis only unless you are news trader. I do news trading with my Forexchief account, and during the period of critical economic event, i don't bother with charts or the technicalities.
 
You can combine both types of analysis to achieve your goals. When you use both fundamental and technical analysis, you can get more accurate picture of the market.
 
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