Fundamental and technical analysis – which one is better for trading

Fundamental and technical analysis - which one is better for trading?

When entering the financial market you will have 2 schools of analysis to choose from. Those are technical analysis and fundamental analysis that will help you accurately predict the direction of the price in the short and long term.

In this article, I will compare them so that investors can find themselves a suitable trading strategy when trading Fixed Time Trade in Olymp Trade.

Notes: It doesn’t have to be 1 out of 2 as you can choose both. This depends on each person’s trading knowledge and skills.

What is fundamental analysis?

Fundamental analysis is a method based on examining the value of an asset across economic and financial factors.  The common factor that fundamental analysts often bring about to “dissect” is macroeconomics. This is because it covers the health of the economy. At the same time, they also monitor micro factors such as the structure and management plans of companies and corporations.

Fundamental analysis
Fundamental analysis

The goal of analysts is to determine real (intrinsic) value. They compare it to the present value to see if the asset’s price is high or low. From there, they can make more reasonable trading decisions.

Fundamental analysis is used to determine the real value or “fair market” of an asset. If the asset is priced lower than analyzed then this is a good time to take long-term hold trades.

What is technical analysis?

Technical analysis is a term that is not unfamiliar to traders. This is because financial websites often have more technical analysis articles than fundamental analysis. Besides, reputable sources are quite limited and difficult to access and synthesize to perform fundamental analysis.

Therefore, technical analysis is the preferred choice of the trader who is just starting to practice analysis. Because it is easier to apply when just analyzing on the chart.

Technical analysis studies the future short and medium-term trends of the market. For example, traders use technical analysis indicators such as Moving Average, Bollinger Bands, MACD, etc., to detect short and long-term trading signals from price charts.

Technical analysis
Technical analysis

It can be used on all kinds of stocks, futures, commodities, currencies, and other assets that own historical transaction data. This data is used to find their “movement habits”. From there, traders can make important decisions referenced from the past.

Difference between technical analysis and fundamental analysis

Fundamental analysis focuses on the key factors that affect assets. They are usually financial reports, important news, management structure, etc., which are used to find the favorable investment point for long-term positions.

On the contrary, technical analysis uses price charts, candlestick patterns, technical indicators, etc., to predict the price movement of an asset in the near or far future. The traders mainly participate in this type of analysis. Because it provides fast and accurate information about current price action. It is possible to rely on that movement to accurately predict the next price of an asset.

Which analysis method to choose to bring profits when trading Fixed Time Trade

The minimum expiration time to open a Fixed Time Trade order is 1 minute and the maximum is 23 hours. Fundamental analysis would then be ineffective. Therefore, traders should consider choosing technical analysis as it is more reasonable. In a short time, technical indicators will help you find good entry points that effectively improve short-term profits.

However, for trading Forex in Olymp Trade, fundamental analysis is what you need to use. Because Forex orders are usually medium and long-term holding positions to maximize profits (win the whole trend) when correctly predicting the next direction of price.

Which analysis method to choose to trade Fixed Time Trade
Which analysis method to choose to trade Fixed Time Trade

We all know that “profit” is the first thing any trader will think of. However, the more you want to make a profit, the further you stray away from it. This is because you only worry about how to get it quickly and simply. You don’t even bother analyzing but just dive into trading crazily like a gambler.

Change from now on and choose a suitable analysis method for your investment. From there, build a trading strategy for your own with full entry conditions and say no to emotion. Only then can you make a profit from Olymp Trade.

Conclusion

Fundamental Analysis and Technical Analysis are different analyzes. However, they are both equally important in the trading process.

For traders on the Olymp Trade platform, the combination of both methods will bring the highest efficiency. Technical analysis helps detect short and medium-term trends. And fundamental analysis will explain why the trend plays out like this.

If you don’t have the power to use both then first learn and practice technical analysis when trading Fixed Time Trade. Luckily, in the strategies section, we have lessons, trading strategies by technical analysis for your reference. I wish you success on the path of trading.

Fundamental and technical analysis – which one is better for trading
4.0 (80%) 42 reviews

LEAVE A REPLY

Please enter your comment!
Please enter your name here