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Fundamental Analysis must be noticed too.

In part one of this article, I noticed some advantages of technical analysis and emphasized that technical analysis is superior to fundamental analysis. At the end of this article, I’ve place the link to part one.

The goal of this article is to explain that you can increase your returns and gains with some knowledge about Fundamental Analysis.

Why Fundamental Analysis is needed?

One of defects in Technical Analysis is that it’s a tiny slow.

It means that the increasing trend of a stock started before, but after some tardiness (maybe after some days) signals of purchase appear in Technical Analysis method. Or for example on the ground of news that company publishes, you could distinguish decreasing trend of stock is starting (with Fundamental Analysis) but decreasing trend’s signals appear with some tardiness in Technical Analysis.

In Technical Analysis, with notice to the past of stock you could forecast its future.

Suppose that a new company who enter in the stock market, There is no past to help us to forecast its future, so you should get helps from Fundamental Analysis.

Sometimes, you find a stock in the stock market that it’s good to purchase with Technical Factors but when you examine it with Fundamental Factors you find that the price of this stock is too far from its real value and its price is increased like a bubble and maybe there are some manipulations in the stock.

Conclusion

Combination of these two methods could give you too much advantage and you could increase the return in the stock market. In fact, it’s superior to know both methods and then select one of theme as a principal method and use other method as a help.

But you should notice that examine of a stock with Fundamental method takes too much time. Remember that you use this method to complete Technical Analysis, so continue your researches in Fundamental Analysis until your researches in Technical Analysis complete. In other words: Find a stock technically and then be sure that there is no problem fundamentally.

Read part 1: Why Technical Analysis is Better to Fundamental Analysis

Here we are going to look at technical analysis and how it can help you make large profits trading forex markets.

Here we are going to show you the logic and how you can use technical analysis to get you a trading edge to acquire consistent profits.

The most common query in regard to technical analysis is:

How can it possibly help you trade when the fundamental supply and demand equation is not known?

The answer is it takes into statement all the supply and demand fundamentals.

How?

Technical analysis works on the basis that the fundamentals are instantly discounted in the price ( and if you think about it this is perfectly logical in today’s world of instant communications ) and all fundamentals immediately show up in price action.

But technical analysis does something more:

The price of anything ( including currencies ) is not just a reflection of the supply and demand fundamentals, it is a reflection of how people view them.

Human psychology finally determines the price of anything.

So, the equation for the determination of price is:

Supply and demand + human psychology = Price

Recurring price patterns

Human nature is constant and this is reflected in recurring price patterns in the market that can be traded for profit.

By studying charts and a whole host of technical indicators traders can determine the odds of where prices will go next.

In essence technical analysis in directly studies the fundamentals and human psychology.

Most short term price spikes are caused by emotion – Not the supply and demand fundamentals and these are simple to spot using technical analysis.

Technical analysis is an art not a science.

You need to practice your art, however if used correctly, it can help you place the odds in your favor and help you spot trading opportunities.

Currency markets are saint for technical analysis as they exhibit long term trends either up or down in price.

By locking into these trends you can trade them for profit and as the major trends can last for months these profits can be huge.

In part 2 of this article we will go through how to use technical analysis correctly to profit from these long term trends.