Why choose Technical Analysis (TA)? Why not Fundamental Analysis (FA)? Or a combination of both?
The debate between these two approaches has always been lively and never-ending. Each has its own strengths and weaknesses. Personally, I believe you can follow either approach—but once you choose, follow it to the end to achieve results.
So why do I focus solely on Technical Analysis and not Fundamental Analysis or a combination?
Because my philosophy is: "once you pick something, commit fully to it." When personal capacity is limited—at least in my case—I focus on mastering one method thoroughly, researching, practicing, and refining it until I am completely proficient… before considering another.
Over the years, I have only practiced Technical Analysis applied to Forex. The more I learn, the more I realize how vast this ocean of knowledge is. The destination is visible, but still distant, and I strongly believe that TA, when practiced to the utmost, can deliver truly worthy results.
Technical Analysis vs. Fundamental Analysis
While both approaches aim to predict market movements:
- Fundamental Analysis (FA): Focuses on economic data, news, central bank policies, geopolitical events, and other macro factors. FA is time-consuming, requires monitoring multiple data sources, and often varies depending on the market.
- Technical Analysis (TA): Focuses on price action itself, using charts, indicators, and patterns. TA is flexible, can be applied to any market, and simplifies decision-making by centering on price behavior rather than external noise.
For traders with limited capacity and time, TA offers a clear, structured, and practical path to mastery.
Why I Prefer Technical Analysis
Here are the main reasons I choose TA:
- TA predicts price trends: It allows you to forecast the direction of prices based on historical chart patterns.
- Price reflects all market information: Any factors that affect supply, demand, or market movements eventually manifest in the price chart. Whether news, fundamental events, or other external factors, the only truth is the price itself. TA focuses solely on price and its related factors, making it necessary and sufficient for analyzing and forecasting market movements.
- Proven results: If you master TA and use it properly, it can yield substantial results. Many successful traders owe their achievements to TA, and their numbers are growing steadily—you can easily find them online.
- Historical repetition principle: TA is based on the premise that “history repeats itself.” Past market behaviors tend to recur in the future, expressed clearly through price chart patterns. These recurring patterns have been observed, studied, and verified over decades. Since TA is closely related to human psychology—and human habits and behaviors are consistent—psychological effects on market movements often repeat. This principle underscores the importance of studying past price action to predict future trends.
- High flexibility across markets: By mastering TA, a single analytical method can be applied to multiple financial markets. In contrast, Fundamental Analysis often requires specific knowledge for each market or asset. As mentioned in the article What Is Forex?, "we learn one method to profit across different markets." This universality is the greatest strength of Technical Analysis.
- Quick feedback loop: TA allows traders to see immediate responses to their analysis. Unlike FA, where results depend on events that may occur weeks or months later, TA lets you test strategies and adjust in real time.
- Consistency and discipline: By relying on charts and indicators, traders develop systematic rules. This helps avoid emotional decision-making, which is one of the main causes of failure in trading.
Common Mistakes New Traders Make
Even with TA, beginners often stumble due to:
- Ignoring risk management and position sizing
- Overcomplicating charts with too many indicators
- Chasing patterns without understanding context
- Letting emotions like fear or greed dominate decisions
Avoiding these mistakes and following structured learning significantly improves the odds of long-term success.
Learning Path for Technical Analysis
For those starting out, the recommended path is:
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Master the basics: Understand candlestick patterns, trend lines, support and resistance.
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Practice consistently: Apply knowledge on demo accounts before risking real money.
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Analyze past data: Backtest strategies on historical charts to see what works.
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Refine and adapt: Learn from mistakes and adjust strategies based on experience.
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Expand to other markets: Once confident in Forex, apply TA to commodities, indices, and other financial instruments.
Personal Approach
Within my personal experience, I will gradually share essential Forex Technical Analysis techniques from my perspective. Some concepts may differ slightly from conventional textbooks or other sources, but they are practical and tested.
Before diving into advanced techniques, it is important to see where TA fits in your Forex journey. Detailed discussion is available here: Introduction to Forex Journey
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