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Forex Trading: Fundamental versus Technical Analysis
Jul 11 2010, 05:57

Ask yourself on what basis will you make a forex trading decision – mathematical data analyzed through charts or larger economic patterns reflected in local monetary policies?


With advancements in technology, there are numerous methods to trade in currency pairs. Broadly, these methods are divided into two categories – fundamental analysis and technical analysis. The former group deals with trading behavior as a result of macroeconomic trends; however, the latter considers historical data to forecast market patterns.


Forex Trading: Fundamental Analysis

In forex trading, fundamental analysis refers to the economic trends of a nation. It is reflected through economic reports, government policies, economic statistics, investment inflows and interest rate levels. Certainly, economic news is the most significant tool for fundamental analysis. To this end, a forex trade should necessarily subscribe to economic news and views from reliable sources.


Forex Trading: Technical Analysis

Technical analysis, in forex trading, involves charting, price value analysis, scientific studies or price range momentum. Complex mathematical calculations that lead to technical analysis are unknown to a large segment of traders. However, you can find several tutorials on how to capitalize on charts and market forecasts. Some of the most popular technical tools for forex trading are:


  • Stochastic oscillator

  • Candlestick

  • Elliot wave

  • Fibonacci

  • Historical volatility

  • Trade volume index


An experienced trader knows that the market is often a mix of both these analysis patterns. Thus, you should always keep an eye on both fundamental and technical analysis patterns. In a normal market situation, fundamental trends largely affect the long-term value of a currency; however, technical tools influence short-term buying/selling. At a smaller level, the policies of your forex broker will also affect your profit taking ability. Invest time in reading forex broker reviews for high-potential trading.


Note: Technical analysis is a scientific approach to forex trading. Thus, it is easy to understand and utilize in currency trading. However, it is the macroeconomic elements that are responsible for hiccups in the market. You should invest more time in analyzing common trading behavior in relation to macroeconomic trends to make the most of forex trading.


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with Matthew Sheppard
Senior Forex
Advisor at XForex

1. What is your name and position?
Hello, my name is Matthew Sheppard and I am a senior forex advisor at XForex.

2. What is your experience and professional background?
In the last 6 years I had filled several positions in financial institutions such as a stock broker, a foreign exchange desk manager, a financial consultant and in my recent role I serve as a senior Forex advisor for XForex which is an online forex company.

3. What type of clients you deal with?
We deal with clients on all levels from the beginning stages to the more advanced trading levels.

4. Does most of your business activity come from the online or offline world?
Because of our high presence on the web, most of our business comes from the online world.

5. Why should a trader pick XForex from all forex brokers?
Aside from all the benefits that XForex offer like commission-free trading, 24/7 online support, high leverage (200:1), XForex offers educational and learning trading experience that you won’t find anywhere else..
Our team of experts and financial trainers provide personal assistance and guide clients to financial success. We provide daily analysis and market reviews to our clients giving them a better understanding of the market and helping them trade profitably.

6. From your experience, what advice would you give a person who wants to enter the forex world?
My advice to the beginning trader entering the Forex world is as follows:
• Learn the market and understand what you’re getting into.
• Research and find the broker that suits your needs and wants. Look for a good offering but more importantly customer service, don’t go for the low rates offer without being certain they have a good customer service department. From my extensive experience in the Forex world your key to success will be your client-broker relationship. I can honestly say that at XForex they put an emphasis on servicing clients, which is so important.
• Invest smartly and calculate your risks
• Always know when to get out of a trade

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