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Are you a technical analyst of the forex market or a fundamental analyst, or are you a bit of both?
I recently interviewed a highly successful trader of the US stock market who turned £11,000 into £137,000 over a few years.
His answer when I asked him, “so…are you a chartist then?” were an emphatic “yes, the charts tell you everything you need to know.”
I have yet to interview a forex trader I know who lives nearby to me in my city and works for a major bank in London.
But I did have a chance to ask a few questions of a friend of mine who used to work for a major bank in New York about his trading style and strategy.
His methodical and academic approach to trading has highly influenced my trading and some of the earlier content on this blog.
He used a combination of fundamental and technical analysis with a heavy focus on knowing how to read the charts like a professional.
Actually, there is no “hocus pocus” required, just a good grounding in knowledge such as candlesticks, patterns that repeat themselves over and over again and a strict disciplinary approach to money management and stop losses as well as taking profits and letting profits run as well.
So, he was primarily a technical analyst as well.
An analyst I hired that used to provide daily updates to my members was what is termed a “pure” technical analyst. Or simply a “technical analyst”. He did not believe too much in fundamentals, preferring that the charts can be relied upon solely, and the market (assuming that it is efficient) will take in to account fundamental changes naturally, so it will not affect the way in which you technically analyse and read your chart.
Without a doubt you can garner a lot of facts about the history of the market action just by studying chart data. And you can also establish trend information, candlestick and chart patterns as well as support and resistance levels.
Remembering now, the forex trader I mentioned above who I have not formally interviewed, did tell me once that he “doesn’t pay attention to the news.”
Again, that lends weight to the argument which entitles this post.
With the array of technical indicators now available to forex investors, such as volume, MACD, moving average, bollinger bands, CCI and so on, forex charts can tell you pretty much everything you need to know…(but see the above post!)
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