﻿ Which type of analysis is better? Fundamental analysis? | Forex Beginning - Forex for beginners

Which type of analysis is better? Fundamental analysis?

We mentioned earlier that both "fundamentalists" and "technicians" think they're the better ones. Supporters of fundamental analysis say that everything in the forex market depends on basic (fundamental) economic indicators and data, and that each price move correctly predicted by technical analysts is due solely to random chance.

On the other hand, technical analysis (TA) supporters argue that traders pay a lot of attention to the charts and act in a predictable way when certain psychological price levels are reached. Therefore, they say, it is possible to predict price movements based only on reading charts and indicators. (We will discuss indicators later.) One thing is certain: you must not be lopsided, do not rely on one of the two approaches exclusively; on the contrary, use both as they complement each other.

In general, we think it is extremely difficult for a lone forex trader to periodically prepare detailed, in-depth fundamental analyses on particular currency pairs. That's why most of the few "fundamental analysts" you will come across happened to rely on analyses developed by analysts working for the big institutional forex market participants, as well as large brokerage houses or economic think tanks.

Numerous reports and studies get published with forecasts based on all sorts of economic models. It is so easy, especially for the beginner forex trader to get so mixed up in the data that at a particular moment he realizes he hasn't managed to make up his mind and doesn't know what to do. That's what they call analysis paralysis. In such cases, many forex traders are turning to the methods of technical analysis to aid them in deciding when to buy / sell a currency.