Technical vs fundamental analysis
These are the two big ways to try to anticipate price. They're not mortal rivals: they answer different questions. Technical looks at how price moves; fundamental, why it should move. Understanding both saves you from pointless arguments and helps you pick your style.
The study of price
Assumes "it's all in the chart": price already reflects all information. It looks for patterns, trends and levels that tend to repeat.
- Tools: candles, support/resistance, trends, indicators.
- Horizon: from seconds (scalping) to weeks.
- Question: "where is price and which way is it pulling?"
- Strong at: timing entries and exits.
The study of value
Assumes price eventually reflects economic reality. It studies what moves that reality: interest rates, inflation, earnings, news.
- Tools: economic calendar, macro data, company earnings.
- Horizon: days to years.
- Question: "is this worth more or less than it trades for?"
- Strong at: the underlying direction and the why.
Quick comparison
| Technical | Fundamental | |
|---|---|---|
| Focuses on | The chart and price | The economy and news |
| Best for | When to enter/exit | What and in which direction |
| Typical horizon | Short and medium | Medium and long |
| Risk | Seeing signals that aren't there | "Being right" but going broke before you're proven right |
The practical truth: almost nobody uses just one
The "technical vs fundamental" debate is largely a false dilemma. Most serious traders combine them: fundamentals tell them what to trade and the underlying direction (e.g. a currency whose central bank is raising rates), and technicals tell them when and where to enter with controlled risk. A trading robot (EA) is almost always 100% technical, because chart rules are easy to program; fundamentals are harder to automate.
Which one to start with?
For short and medium-term trading (the most common when starting out), master technical first: candles, support and resistance, trend and indicators. Add fundamentals as context (keep the economic calendar in view so you don't trade blind when important data drops). And remember: neither works without risk management — you can have the best analysis in the world and still blow up without it.