Is The Fundamental Or The Technical Method Better For Forex Trading?

Getting started with Forex trading means that you will have to choose either the fundamental method of the technical method. Many people use one method or the other and are able to get the profit they want for either system. This means both methods will work, it may just depend on what kind of person you are or what you prefer. Here are some things about the fundamental and the technical methods that will help you decide which one is better for your Forex trading.

Fundamental Method Requires Greater Amount Of Research

The fundamental method is the older of the two and has been relied on by many through the years. It will also mean that you will need to do more research.

Your research will provide you with a lot of general information about the news and other worldwide events that may affect world economies. You will also need to keep an eye on political events that may shake up economies, and actions of large corporations and central banks. Economic trends, such as are shaking up national currencies now, also definitely play a factor in Forex predictions.

Technical Method Relies On Charts

The technical method, on the other hand, uses charts. These charts are indicators of various factors that play a part in understanding what may be happening to national currencies in the past hours, days, weeks, etc., so that trends are revealed. By looking at what has been happening to a currency, you can often tell when something may occur that will indicate the desired market fluctuation that will result in profit for you.

The idea behind the technical approach is that everything you need is right there in front of you. By studying charts of the past, and looking to see when desirable fluctuations occurred, you should be able to see when it will happen again.

One reason that more people may rely on the technical approach is because it takes less effort to see what they want to know. It is all right there on the charts. This certainly keeps it simple. They only have to go one place.

The Algo Method May Even Be Better

A rather new method, called the algo (short for algorithmic) or black box method, uses computer generated methods to determine when market fluctuations are about to occur. More and more people are switching to this method and it seems to be working for them.

Basically, you learn to rely on the black box rather than having to learn or know about events or situations leading up to possible profit. It seems like it does all the work for you. This could be good, but changing the method and factors you use may be out.

Some Traders Use Some of Both

A number of Forex traders actually rely on both methods, with a possibility of leaning more toward one than the other. Their thinking is that the fundamental approach will reveal places to look, and then the technical approach will indicate the time – quite possible. You will need to learn the ins and outs of both before you decide which approach you want.

You may also want to keep in mind that the software at different Forex trading Web sites is different. This means that as you learn which method is better for you that you will want to try out the software at different Forex Dealers Web sites because it may offer more calculations put into their charts, or other data that may be useful to you.