Technical and fundamental trading defined

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Most new traders do not realise that there are two types of trading styles they need to consider - technical trading and fundamental trading. Both trading styles have their advantages and disadvantages but once you decide what type of trader you wish to be, the learning process begins. Interpreting chart patterns or economic news/data correctly can have a super effect on your Forex trading account. However, interpreting charts or data incorrectly can have detrimental effects. So, please ensure that you know the basics of both trading styles first before trading. If you cannot decide, then become both types of trader.

Technical Forex trading

Technical trading is purely based on charts. The reason for this is because charts are viewed as graphical representations of human behaviour. By simply looking at charts, traders can understand how the world/market reacts throughout the day. Forex trading strategies employed in this trading style orientate around trading patters A.K.A. set-ups. We will teach you how to identify, trade and exit these set-ups in the later Forex training videos but for now, all you need to know is the difference between the two trading styles.

Fundamental Forex trading

Fundamental trading is based purely on news/data/economic releases. They occur on a daily, weekly, monthly and yearly basis. For example, the weekly US unemployment number is one of the most important data releases, so if you are trading time frames below H4, you should exit out of the market. If you are trading above H4, you should be ok to stay in the trade. The biggest number of the month is the NFP (Non-farm payroll) number that comes out of the USA. No matter what you are trading techicaly, you should exit your trade when this number is due out. It has the power to literally make charts shoot up or drop down drastically. For all news/data/economic releases visit our economic calendar.