In this post, I’m going to share with you the key differences between technical and fundamental analysis and why as a trading beginner, you should focus on learning technical analysis. By the end of this article, you’ll have a clear understanding of these two methods and why technical analysis is the better choice for your trading journey.
Fundamental Analysis Explained
Fundamental analysis involves comparing the strength of one country’s economy to another by looking at economic data like GDP, interest rates, inflation, and unemployment numbers. Traders also consider political news and global commodity prices. This approach helps traders make decisions based on economic data and news.
Technical Analysis Explained
Technical analysis, on the other hand, uses price movements on a chart to predict future prices. The premise is that historical prices can be used to forecast future prices. Technical analysis involves:
- Trend Identification
- Identifying Price Reversal Levels
- Recognizing Candlesticks or Price Action Setups
- Using Indicators (e.g., Moving Averages, Average True Range)
My Trading Story: Choosing the Right Path
When I started trading in 2013, I initially used fundamental analysis. Unfortunately, I blew up my account twice during that period. After a break, I came back to trading and decided to focus on technical analysis.
Why Technical Analysis is Better for Beginners
Technical analysis offers several advantages over fundamental analysis:
- Clear and objective entry and exit points
- Exact price levels for buying and selling
- Emotion-free and subjective-free trading
- Easy backtesting to determine if a strategy has an edge
Master Technical Analysis for Trading Success
To become a successful trader, focus on mastering technical analysis and the basics of trading. To help you on your journey, I’ve created a Free Training called the “7-Steps to Financial Freedom through Trading” to teach you how to make a realistic income through trading.
If you’re ready to take the next step and learn more about “How you can Start Trading for a Living,” then sign up below: