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Technical vs Fundamental Analysis in Forex
UNDERSTANDING THE DIFFERENCES BETWEEN FUNDAMENTAL AND TECHNICAL ANALYSIS IN FOREX TRADING
There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? In this article we will explore what the difference is between these two types of traders and which pieces of information forex traders in particular tend to look at.
Technical vs fundamental analysis comparison
|
TECHNICAL ANALYSIS |
FUNDAMENTAL ANALYSIS |
|
|
Definition |
Forecast price movements using chart patterns |
Various economic data used to establish value/ target price |
|
Data considered |
Price action (charts) |
Inflation, GDP, interest rates etc |
|
Time horizon |
Short, medium and long term |
Medium and long term |
|
Skillset required |
Chart analysis |
Economics & statistical analysis |
FUNDAMENTAL ANALYSIS
Fundamental analysis involves assessing the economic well-being of a country, and by extension, the currency. It does not take into account currency price movements. Rather, fundamental forex traders will use data points to determine the strength of a particular currency.
