milkymo Posted December 27, 2010 Share Posted December 27, 2010 This editorial will report a few of the differences between Technical Analysis and Fundamentals and report a bit about each type of trading. Excerpts are taken from the best-selling book ‘Market Wizards’ where Jack Schwager interviews Ed Seykota and Bruce Kovner. Ed is a trend trader (uses technical analysis) and also depends on hunches from 20 years of experience. he definitely emphasizes his reliance on technical analysis. While reading this, I liken, the ‘hunches’ to knowing the effect fundamentals can have on a market although I could be mistaken, they could be purely from reading many charts so well. Here are is exact words “Fundamentals that you read about are typically useless as the market has already discounted the cost, and I call them ‘funny-mentals.’ However, in case you catch on early, before others think, then you might have valuable ‘surprise-a-mentals.’” Ed says his priorities when trading are the long term trend, the current charts and picking a nice spot to buy or sell, in that order. Bruce says technical is awesome and useful but by no means disregards fundamentals. It’s important to note that technical analysis is a critical method of understanding the history of market movements and hence useful to identify trends. It doesn’t actually tell us where the money is going but analyses historical data. they then need to make use of our own intelligence to see what the activity of trading says about future trades. Technical Analysis can be compared to taking a patient’s temperature. To ignore it is ignorance and it can tell you whether a market is active, or nice and dormant. It’s the basics that will help to indicate whether a trading value will increase or decrease. It also picks up unusual behaviour. Anything that creates a brand spanking new chart pattern is something unusual. he also says “Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.” Everything that makes a country tick, in Forex terms. Consumer spending, government spending, employment cost index, government policy, political concerns and even an individual event can influence the market heavily. In summary, the basics will indicate the direction of a cost but not exact prices. The chart analysis or technical analysis is better for that, so together you are able to increase your chances of coming away with some pips. The reason technical analysis is so emphasized is that many traders use charts to trade and at any given time, will be drawing the same lines of resistance and same lines of support. So in case you are able to read the charts well, you have an awesome chance of predicting market movements. The best way to learn about the effect of fundamentals is to learn one piece of economic data at a time. This will help you make better-educated trades. Quote Link to comment Share on other sites More sharing options...
myregister Posted November 11, 2014 Share Posted November 11, 2014 There are many factors but news and people's psychology that influences the market, and also since this market is so free, we can move the price even only an inch. Each human's bid give an inch influence of the market price, the more people buy the price will keep increasing and vice versa. Quote Link to comment Share on other sites More sharing options...
Alice Frampton Posted February 25, 2015 Share Posted February 25, 2015 News definitely influence the market most and that’s why it is so important to stay up to date with the news event as if we get it wrong then it can be seriously costly and frankly speaking I might not be able to do this well if I had not got the support from my broker OctaFX, it has amazing Economic Calendar section where I can follow all the latest news and event that to according to my time zone. Quote Link to comment Share on other sites More sharing options...
myregister Posted February 26, 2015 Share Posted February 26, 2015 Well aside from that i think that economic policy of one influential country could affect that. You can see that is economic policy that will influence people to do more bid and bid so the price keep rising or even fall deeper, something like Interest Rate are so powerful. Quote Link to comment Share on other sites More sharing options...
shemoalaa85 Posted May 18, 2015 Share Posted May 18, 2015 There are many factors but news and people's psychology that influences the market News definitely influence the market most and that’s why it is so important to stay up to date with the news event as if we get it wrong Quote Link to comment Share on other sites More sharing options...
pepy Posted June 4, 2015 Share Posted June 4, 2015 Thanks for your own interpretation but it is people's psychology that make the price move, because they feel fear or excitement when there is a new released to the public and if that is more than they hope they will buy but if not they will fear and start selling theirs. So the price also fall with this. Quote Link to comment Share on other sites More sharing options...
myregister Posted June 8, 2015 Share Posted June 8, 2015 People's psychology is the basic but there is something that make them feel excited and like you said it is news or other indicators that move them to buy or sell their currency for the others. So in the end the outer factor such as news is what influences fx prices. Quote Link to comment Share on other sites More sharing options...
pepy Posted June 19, 2015 Share Posted June 19, 2015 GDP, people's demand and supply, energy prices, unemployment rate and other commodity's prices. That sums it all, also according to me a manipulation from big traders that has bigger cash in their pocket could drive the deepest psychology of foreign exchange trader. Quote Link to comment Share on other sites More sharing options...
myregister Posted June 29, 2015 Share Posted June 29, 2015 Well based on my experience i would agree with you, economic data is playing important part to influencing the price of foreign exchange. GDP or in US which is NFP playing important and change the price of one currency towards the other greatly. Quote Link to comment Share on other sites More sharing options...
pepy Posted July 1, 2015 Share Posted July 1, 2015 Well based on my experience i would agree with you, economic data is playing important part to influencing the price of foreign exchange. GDP or in US which is NFP playing important and change the price of one currency towards the other greatly.See, news are playing important part of influencing the price of foreign exchange. Many traders already realize this issue including me, many people see this as the chance of making more bucks with new way to trade but actually this is an old way, i mean the shifting to technical analysis is a younger analysis type compared to fundamental analysis. Quote Link to comment Share on other sites More sharing options...
myregister Posted July 24, 2015 Share Posted July 24, 2015 Of course it will affected the market a lot, but remember there are rare or few cases that it is not like that the first and the only one that really affected price of each currency is the psychology of trader itself, where they decided to buy or sell. If there are more people that BUY than SELL the price may stay intact or even Interest rate is falling down but they still think that one country economy is good in future, they will still keep that money. Quote Link to comment Share on other sites More sharing options...
pepy Posted July 26, 2015 Share Posted July 26, 2015 Of course it will affected the market a lot, but remember there are rare or few cases that it is not like that the first and the only one that really affected price of each currency is the psychology of trader itself, where they decided to buy or sell. If there are more people that BUY than SELL the price may stay intact or even Interest rate is falling down but they still think that one country economy is good in future, they will still keep that money. News the one who influence the price to higher extent or vice versa. News that makes people want to sell or buy something. I know if there's no indicator how can people want to take an action? they will just love with it and does not sell or buy their currency. Quote Link to comment Share on other sites More sharing options...
myregister Posted September 22, 2015 Share Posted September 22, 2015 There are a lot of things that influenced the price of each currency from their trading balance, GDP, Employment or Unemployment or Inflation. In fact we are trader affected by that and strive to make better trading by speculate thus increase or decrease the value of one currency as the effect. Quote Link to comment Share on other sites More sharing options...
pepy Posted October 31, 2015 Share Posted October 31, 2015 Well, Let me refresh about this issue. First of all there are a lot of indicators one of them are inflation rate or deflation rate. Inflation and Deflation rate are changing effectively every month and in short term will affect the price usually around 50-100 pips difference. Aside from that there is Interest Rate which rarely change from one month to the other, but often give a great impact. I think there are more but i see those two types give significant change of FX prices. Quote Link to comment Share on other sites More sharing options...
myregister Posted November 8, 2015 Share Posted November 8, 2015 Inflation rate for sure will affect currency strength but there is other indicator ., right? Such as GDP or Unemployment/Employment change, and of course Interest rate which will change the trend so great. But the most dynamic above that all actually Inflation i mean from its impact it is bigger than Employment/Unemployment. Interest is the biggest but doesn't so dynamic. Quote Link to comment Share on other sites More sharing options...
pepy Posted November 10, 2015 Share Posted November 10, 2015 Unemployment rate at certain situation could beat the effect of inflation. Inflation is good but i prefer all of those high impact news because it will truly drive the price up to higher rate or even pushing it fall below of our own expectation. In this case Whether interest rate, inflation or unemployment rate are important. Quote Link to comment Share on other sites More sharing options...
myregister Posted November 15, 2015 Share Posted November 15, 2015 FX prices influenced by of course people who participated inside, well that is for a floating currency but for so-well controlled currency such as CNY well it is affected by you know who LOL . Usually it is a chain effect from government policy or even economic news result. Quote Link to comment Share on other sites More sharing options...
pepy Posted December 10, 2015 Share Posted December 10, 2015 What influences the price for sure news but technically it is human's psychology that affected it imagine if 4 billion people suddenly decide to sell USD on EURUSD, the price of it will fall deeper and of course will affect the price and other people who doesn't take any decision yet, there are bigger chance they will do the same and that is what influenced the price. Quote Link to comment Share on other sites More sharing options...
myregister Posted December 12, 2015 Share Posted December 12, 2015 But what trigger their own action, there must be something wrong there isn't it? The answer for sure is news. Imagine if FED next week decide to rise the rate of USD to 0.5 or even 1%? What will happen? Of course it will trigger people's action to BUY USD and sell the other pairs that paired with USD. Their psychology in fact affected by something which is news. Quote Link to comment Share on other sites More sharing options...
pepy Posted December 20, 2015 Share Posted December 20, 2015 But what trigger their own action, there must be something wrong there isn't it? The answer for sure is news. Imagine if FED next week decide to rise the rate of USD to 0.5 or even 1%? What will happen? Of course it will trigger people's action to BUY USD and sell the other pairs that paired with USD. Their psychology in fact affected by something which is news. News affect people's psychology to trigger to choose between short or long a currency pair. This is acceptable for me, as we can see many trader's psychology affected by high impact news and in relatively shorter time the price may turn its table. So i can say News -> Trader's psychology -> Trader's action -> Price movement. Quote Link to comment Share on other sites More sharing options...
myregister Posted January 12, 2016 Share Posted January 12, 2016 Come up with that statement, i think it is not just people psychology, it must have something that trigger's people psychology to trade, to act and that is what news gives. Also it is a fundamental indicator for how healthy one country condition. It will give better sight of do we need to hold a country's currency. Quote Link to comment Share on other sites More sharing options...
pepy Posted January 25, 2016 Share Posted January 25, 2016 It has been talked many times before and i think we all know it is news that influences the fx prices, because news is fundamental part of one country economy, if based on forecast and previous result that one country's inflation is higher usually or in 98% cases People will start to buy one currency and will drive the price to higher level. Quote Link to comment Share on other sites More sharing options...
myregister Posted February 2, 2016 Share Posted February 2, 2016 News indeed is something fundamental since News contains the data of economic situation of a country, so it is used as a reference for traders either to sell or buy a currency. But at the same time, sometimes sentiment could also beat the news and i've seen this happen several times. Quote Link to comment Share on other sites More sharing options...
pepy Posted February 6, 2016 Share Posted February 6, 2016 I think monetary policy is also one of the factor that affected currency pirce, usually Central Bank trying to intervene the market so their currency still able to survive depend on the situation. This is use some policy that will favour one country's currency and if that happens to major pairs, the price will move. Quote Link to comment Share on other sites More sharing options...
myregister Posted February 27, 2016 Share Posted February 27, 2016 It is speculation that drive the price LOL, but of course because there is something and news is the biggest factor of the factor behind of massive speculation. In shorter term you can easily see around 30-100 pips in few hours but if you want to be a long term trader it is quite hard as long as you can play with rumours. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.