Fundamental technical research

June 5th, 2009

Plenty of forums about Forex-trading are full of threads where traders try to answer the same question: what is better? Fundamental or technical analysis?

In my opinion the answer to this question even does not exist. In many respects it is because the question as itself does not contain a correct comparison of two equivalent issues. That is why I would like to take up both types of analysis separately. Of course I will not be able to avoid oblique compares.

Fundamental analysis is based on the information of one kind, and technical one considers another data. There are also differences in fields of application of each analysis’s types. Fundamental research is made during a long-term period, and technical analysis – short-term.

It is not a secret, that fundamental factors are crucial macroeconomic indicators of the national economy state. These indicators influence on participants of exchange market and on currencies’ rates. Looking it another way, fundamental analysis studies all the economical indices, which affect the price of an investment object of in distinction with the technical analysis of trend patterns on graphics. However, not each adherent of fundamental analysis remember, that it is necessary to note one and all the economical indicators. Basic among them are:

- Interest rates

- Money supply

- Unemployment

- Non farm Payrolls

- Gross National Product

- Gross Domestic Product

- Consumer Price Index

- Producer Price Index

- Trade Balance

- Jobless Claims

- Industrial Production

- Capacity Utilization

- ISM

- Personal Income

- Car Sales

- Retail Sales

- Durable Goods Orders

- Consumer Confidence

- New Home Sales

- Construction Spending

- Factory Orders

- Business Inventories

It is necessary to understand that to interpret economic indexes is not an easy job. The person should have good economic education, analytical mind in order to make qualified conclusions on the basis of fundamental analysis. Interpretation of indexes by newbies in the way like “the level of industrial production in USA increases that is why US dollar rate rises” has nothing in common with qualified analysis and forecast. Only professional analytics who read regularly records and press-releases, communicate with people from trading and investing fields are able to examine all indexes in complex. However, do not give your attempts to master fundamental analysis up for lost. Even basic fundamental analysis based on small experience and common knowledge in economic may help to “catch” trend, sometimes even long-term one. Unlike fundamental analysis, technical analysis studies predictable events inside of trading process with the help of trend indicators which are seen among lines at chat. Trend models and figures of technical analysis are formed from these lines. It is possible to forecast prices movement at chats with the help of trends method.

Adherents of the technical analysis hold by an opinion that fundamental analysis has already taken into account by the market and included to the price. That is why price chat studying is enough for technical analysis forecast. In other words technical analysis is a part of fundamental analysis.

In spite of some simplifying of the real situation – time shift from the moment of information receipt to the moment of its influence on a price is not taken into consideration – this is difficult to question. Technical analysis is a short-term analysis and price always moves in one direction. Three types of trends are distinguished:

“Bullish” trend – prices move up. The definition “bullish” was arisen in a similar way to a metaphor “a bull which raises a price on his horns”. This is situation on price chat when assets’ prices take support level as starting point and set new price maximum. Support and resistance lines are directed up.

“Bearish” trend – prices move down. In this case, a bear crushes a price down falling on it by its body. The situation is reversed to the previous one, prices go to the resistance level, push themselves away from it every time set new minimum, so trend will be directed down.

Sideways trend – there is no definite movement of the price. In this situation the prices are “closed” in some range and go from the line of resistance to the support line and back without new maximum or minimum set. Usually such movement is called “flat”, rarer “whipsaw”.

It should be mentioned that long “flat” is an indicator of price storm at the market – strong movement of the price to some direction.

As a rule prices do not move linearly up or down. However, trend line is directed up when we have bullish trend and prices grow quicker than fall. Quite opposite thing happens when we have bearish trend.

Consequently basic laws of trend construction may be deduced:

- “active trend with more possibility will continue when change its direction”, or

-  “trend will move in one and the same direction till becomes weaker”.

However, do not use oscillators during heavy trend because they are designed for short trends, when long-term fall takes place oscillators signal about resell and advise to buy but the fall is far from bottom. That is why it is more reasonable to trade trends and oscillators use during sideways trends.

Technical analysis is based on unchanging laws of physics, economy and psychology in different historical periods. Other words those rules which work in the past work in the present and will work in the future. That is why this statement gives traders, who use technical analysis, basis with a big likelihood ratio forecast future while trading trend.

Summing up, I must say that there is no need to divide fundamental and technical analysis into correct and incorrect, effective and ineffective, useful and useless. Both types of analysis complement one another. Fundamental lets count the perspectives of the movement main direction and technical lets start and finish trading in time.


The article was added by Vladimir Syrov,

InstaForex Chief development manager

FX EXPO harvest

April 20th, 2009

Manager and representatives of InstaForex Company have returned from the two-day indefatigable exposition at MOSCOW FX EXPO 2009.

This exposition brought not only positive emotions and great impressions but also great number of new contacts, acquaintances and ideas. There were partnership and friendship relations born with companies-participants of FX EXPO, also negotiations about future opening of the InstaForex introducing office in Moscow were carried out. InstaForex representatives also met with partners from St. Petersburg, Novosibirsk, Georgia, and Malaysia.

More than a hundred new clients opened trading accounts in InstaForex right at the exposition to certain of profitability of trading instruments in InstaForex comparing with other brokers. Accounts of new clients will be credited with 30 USD of the welcome bonus as primary deposit according to the campaign offer.

Moreover, exposition urged the company to develop new directions of business running, such as trust trading accounts’ managing, bank guarantee for trading accounts, bringing into service of the segregated accounts.

View photoreport

Added by Vladimir Syrov,

InstaForex Chief development manager

FOREX and time for trading

April 3rd, 2009

Nowadays Stock Exchanges of London, New York, Tokyo and Sidney are the main marketmakers in the world. These points of flow of funds crosses provide more than third part of currency dealings.

Even though working time of FOREX market is not limited (24 hours a day, 7 days a week) and not attached to any stock exchange, activity and quiet hours are observed in the exchange market. The given patches are concerned to intersection of working time of the world stock exchange. Thus for example a period from 1:00 pm till 5:00 pm (GMT 0) is time for trading session together on the largest New York change and on the second in terms of volume, London stock exchange. The most activity in the market is to be observed at these particular 4 hours and, consequently, after market volatility increase, risk level for market participants also rises. However, just in this period of the storm, not calm, you can earn the highest profit, thank’s in the largest part to strong wind swinging rates of exchage. That is why traders following agressive manner of trade choose for themselves periods of highest activity on FOREX.

But in the way if you are adherent of conservative trading methodic and minimization of risk is your priority, then the most comfortable time for your trades is patch from 22:00 till 00:00 (GMT 0), when only Sydney exchange works all over the world. At the same time I should point to the fact, that in this period you can as well not to loose great sums from your account as not to catch a really big fish. In the other side, for better minimization of even small losses you can use very simple instruments of heging.

Experts advice newbies to start their careers in FOREX at the hours of lowest activity. It is great time to try the whole existing market instruments, trace back trends and practice various strategies. But sooner or later shoal will get on your wick and you would like to enter “big waters”.

The article is added by Alexander Demkin,
InstaForex chief-dealer

Analytics from Alexey Goncharov at the InstaForex.com

March 30th, 2009

There is new page available at the official website of InstaForex Company. This page is dedicated to analytic articles and FOREX forecasts. At the given moment analytical releases are weekly renewed, but in future we will refresh them more regularly.

Analytics presented by InstaForex is high-quality intellectual material. We process a lot of data from all the world economic, financial and political platforms.

The presenter of the column is experienced financial analyst contributed with the leading traders’ portals. His name is Alexey Goncharov. Lets give him permission to speak: “Maybe you are already in the know with my reviews at the pages of different trading resources, maybe some of you get to know me for the first time. My name is Alexey Goncharov and henceforth I will write for InstaForex analytical rubric. I propose to publish my thoughts regarding FOREX, trading recommendations, technical analysis, and per se what will be interesting for me at the moment of writing releases. I hope, this column will attract your attention and will be useful for you”.

You can read articles here.

Added by Anna Lukina,

Instaforex International clients’ Senior Manager

Corporate party: Women’s Day

March 16th, 2009

IFX team have not come round yet, but another celebration began. It was gentlemen turn to congratulate ladies. Boys coped with a task and organized great party for girls’ company. They were meeting ladies in the morning with beautiful bunches of flowers and boxes of candy. Then, after working day is off, all the team went to a restaurant for having party. Noone was boring there: lots of fun and festive mood were in the air.

Added by Ekaterina Abramova,
PR-manager of InstaForex