Fundamental or Technical analysis: which one is for you?

The fundamental analyst in Forex attempts to draw overall conclusions concerning the economic health of a particular economy based on political, social and economic indicators. Based on these conclusions, fundamental analysts determine whether a particular currency is over or undervalued, and trade accordingly.

While fundamental analysis is useful in determining the overall health of an economy, the number of factors contributing to the health of an economy may condemn the fundamental trader to a life of constant analysis. And while, when a conclusion is drawn, a fundamental analyst can confidently hold a long term position, some might say they are missing out on other profitable opportunities.

Unlike the Fundamental analyst, Technical analysts believe that all the forces impacting currency price are instantly factored into the market. Eschewing news trading, the technical analyst attempts to construct forecast models for particular currencies based on previous market activity, as reflected in the charts.

There are certain patterns that continuously appear in online Forex movements, and if a particular pattern can be recognized before it is complete, online traders can make substantial profit.Beneath the sound and fury of seemingly arbitrary price fluctuations, the technical analysts locates identifiable patterns in the charts.

Certain patterns that continuously appear in currency movements—such as head and shoulders, ascending and descending triangles, and wedges, to name a few—and technical traders look for these in order to identify entry and exit points.Some brokerages provide complimentary advanced charting features, complete with dozens of indicators and tools used to aid in technical analysis.