johndvd122
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What are the types of analysis need to do in Forex Trading?
What are the types of analysis need to do in Forex Trading?
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dbphoenix
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nikita sharma
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fundamental and technical, both analysis are required to trade in forex efficiently..
Both are not required. You can trade fundamentally without any technical analysis
I agree with db, psychoanalysis is a good idea but strictly follow your system can give better results in term of therapy.......
Apart from the above I suggest you only focus on technicality, here fundamentals are already embedded. Of course you need to be aware daily of the upcoming releases and monitor how prices react/non react to the major releases.
I would not recommend trading forex on a smaller time frame than 60m, if you trade the 60m I suggest you draw your TA on the 240m.
Yes you can still trade forex on smaller TF but technicality are less reliable in my opinion. Good trades are made on larger swings.
Apart from the above I suggest you only focus on technicality, here fundamentals are already embedded. Of course you need to be aware daily of the upcoming releases and monitor how prices react/non react to the major releases.
I would not recommend trading forex on a smaller time frame than 60m, if you trade the 60m I suggest you draw your TA on the 240m.
Yes you can still trade forex on smaller TF but technicality are less reliable in my opinion. Good trades are made on larger swings.
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I couldn't disagree more with this statement and I'll even give you an example where I took a fundamental position against the technical setup. Usdjpy was in a major downtrend with technical attributes to a break out pending. On this forum and others (which I browse but never participate), technical traders were all talking of a breakout. Fundamentally, a change was taking place in the months leading to August where subsequent data points tipped sentiment.
Nobody trading technically could have seen this because technically analysis requires historical prints for future predictions. I was long while all technical traders were either sidelined or setting orders for a breakout South. The only context which charts align with fundamentals is when an established trend is in place, not turning points. You could argue that you don't need to catch all of it to make money which is true. I would however argue less risk trading fundamentally and more profit potential. So both strategies work but one is superior to the other.
dbphoenix
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Depends on the "if-then". That someone is trading "technically" doesn't mean that they're any good at it. There's no particular reason why fundamentals and technicals can't align at turning points as well as in trends.
Nothing wrong with mixing them. However, to say that you don't need fundamental analysis because the charts already show it is incorrect.
Hi forker
Thank you for your post.
The leg down (also a wedge, not perfect) from the 31/5/15 down to 19/6/16 is a 50% retracement bull flag of the up leg from 23/10/11 up to 31/5/15.
If you go to the weekly TF it is clear.
EDIT: In August this year we have a DB and in September a DB pullback.
Hi Fugazsy
Would you mind showing a chart of that because if I look at the weekly it's a complete pullback to make a lower low than March 2014. Here is the monthly chart and it doesn't even look remotely bullish after breaking a key level.
Said that if you make money on what you doing I would suggest to go it your way because we are all different and what you will see in FA probably you will not see as good as with TA.
I just replied to the thread starter and I gave him my view and the way I trade, hopefully he also will find something that makes sense to him and both our posts with different views may help him to shape his way.....
EDIT: A LL or BO does not mean it will continue that way, most of BO fail, if there is not continuation bears will cover (mostly at a loss) and bulls will join in... A key level is only a perception, nothing more as with all TA analysis.
TA needs to be view as an art form not as science, there is constant battle between the parts, a line does not define where weight is gong to be shift, but the overall details in rapport to the market condition will.
Need to go now.......Had and I will have a busy day again tomorrow...
I just replied to the thread starter and I gave him my view and the way I trade, hopefully he also will find something that makes sense to him and both our posts with different views may help him to shape his way.....
EDIT: A LL or BO does not mean it will continue that way, most of BO fail, if there is not continuation bears will cover (mostly at a loss) and bulls will join in... A key level is only a perception, nothing more as with all TA analysis.
TA needs to be view as an art form not as science, there is constant battle between the parts, a line does not define where weight is gong to be shift, but the overall details in rapport to the market condition will.
Need to go now.......Had and I will have a busy day again tomorrow...
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timsk
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Hi forker,
If you're saying this is how it is for you based on the way you trade and your understanding / belief about the way markets function - then that's fair enough. If you're saying this is universally the case and applies to all traders across all markets, then I beg to differ.
Traders who utilize TA exclusively tend to subscribe to Dow Theory which - for the benefit of those unfamiliar with it (not you I'm sure), has six basic tenets:
1. The market has three movements
2. Market trends have three phases
3. The stock market discounts all news
4. Stock market averages must confirm each other
5. Trends are confirmed by volume
6. Trends exist until definitive signals prove that they have ended
The most important one (in the context of this discussion at least) is the 3rd one highlighted in blue. Traders who sign up to this will argue that beyond the news releases mentioned by Fugazsy, not only is fundamental analysis not required - it may actually be a hindrance.
Tim.
hi Tim
I never stated this is universal which i thought would be clear from the thread title.
dbphoenix
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While I agree with Fugazsy that "key levels" are only a matter of perception, it is important to remember that price movement is not random, that these marks on the chart canvas are records of trades, and that these trades are made by people. These marks do not simply occur.
For whatever reason, sellers dominate buyers, supply outweighs demand. Without going into a lot of detail, at each break of the stride price eventually makes a lower low and a new, less acute line is drawn to track the new stride (though it is obvious enough that no line need be drawn at all). Eventually, after one of these breaks, a higher low is traded. This represents a trading opportunity.
After the initial rally, price retraces then moves sideways for a time. This represents equilibrium, in which positions are exited or lightened or increased or new positions are taken, throughout all of which traders are determining value. Once they've determined what the value is (the rightmost point of this), price rises again. Eventually and perhaps coincidentally, this "value level" is tested by traders and found to be, so far, still valid. I suppose art is involved in some sense, but it's mostly a matter of understanding what it is traders are trying to do.
For whatever reason, sellers dominate buyers, supply outweighs demand. Without going into a lot of detail, at each break of the stride price eventually makes a lower low and a new, less acute line is drawn to track the new stride (though it is obvious enough that no line need be drawn at all). Eventually, after one of these breaks, a higher low is traded. This represents a trading opportunity.
After the initial rally, price retraces then moves sideways for a time. This represents equilibrium, in which positions are exited or lightened or increased or new positions are taken, throughout all of which traders are determining value. Once they've determined what the value is (the rightmost point of this), price rises again. Eventually and perhaps coincidentally, this "value level" is tested by traders and found to be, so far, still valid. I suppose art is involved in some sense, but it's mostly a matter of understanding what it is traders are trying to do.
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hi Fugazsy
A flag in the traditional sense has a sharp move followed by consolidation to form a wedge or a pennant. I don't see a flag formation here but rather a steady downtrend followed by 4 months of consolidation with lower highs within. In fact, if i were to reference this to traditional patterns, it more closely resembles a descending triangle which is a bearish pattern but really only offers 50% chance of playing out.
you also mentioned double and triple bottoms in your diagram. In TA these do indeed represent trading opportunities, however, in relation to the downtrend they are in a technical sense (against the trend). In the years i practiced TA, I invested a lot of time looking at this and found that it was more or less a coin flip success rate. For this reason, a trader will need to assume more risk and wait for confirmation (breakout or trend formation)
I tried both approaches with moderate success. The problem i found was that however i tried, only a few trades nailed a trend and when you account for the ones that didn't then you end up with far less profit through losses and trading costs. So while i do agree it works technically, you need to have those home runs to pay off costs and losses. Fundamentally i am able to filter out those losing trades and run trends far more efficiently that i ever could technically. When i establish a fundamental shift is taking place i will take profit and get in at better prices multiple times knowing the trend is there without guesswork. I can get in with higher confidence before double bottoms form or other traditional patterns and start slicing profit on multiple trades. I couldn't dream of doing this following a technical approach and believe me i gave it a decade of trying. The problem wasn't failure but rather the ability to stick with the ones that allowed the absorption of losses and costs.
I know everyone is different in how they do this but in my experience i have little doubt that my account is growing significantly more than it did using TA as primary analysis. I should also point out that individual data points released do not give the trader enough information to establish if a trend is forming. Anyways, i respect you way of doing it, this is merely my standpoint on the matter.
laters
Which in technical terms is near impossible. All a trader can do is employ inefficient strategies that are at the mercy of session scoped data releases. You might get a slight deviation in a number which is enough to take you out but doesn't in itself represent a change in the underlying move.
If you know the basis of change then you can calculate an estimate of the magnitude of a move. So for example if you determine interest rates are going to start rising then you can expect a 3% to 5% appreciation as an initial leg. You can determine further moves by tracking the labour market and inflation data points. When you see a slowdown then you can expect the trend to have less fuel and at this point you can start adapting your position and strategy. if these points show no sign of change then expect another rate rise and further appreciation (and so on and so forth)
Actually, the first challenge is to know it is a trend. But after that nobody can know with certainty when a trend is about to end and/or reverse. The most probable outcome however is that it continues.
