Go to any popular Forex trading forum and you’ll see entire sections dedicated to the discussion of various technical indicators and systems.
You’ll see people talking about different period settings and how they use them in combination with other indicators to try to “make money” trading.
But there’s a fundamental flaw with this approach… because these traders have put the cart before the horse!
You see… you don’t first select the technical indicators you want to use, and then figure out how to make money with them… that’s not how real trading works.
Real trading works by first having a trade idea (based on economic fundamentals), and then selecting the technical tools to help identify your trade entry.
Most retail traders have it the wrong way around.
Hi Chris
You are hitting the nail right on the head.
Traders should look at Fundamentals first, and only then use the technical indicators to see if there are any confluences. The more confluences, the better the possibility of it being a good trade.
Thanks for your blog. You are like a very rare wine. It is always good.
Have a nice day.
Haha Frank, I think that’s the most creative compliment I’ve ever received… thanks!
You are welcome. I only give compliments to people who deserve it and you are definitely one of them.
I am happy I know you and I won’t be mislead anymore. Initially I wanted to study and understand every Technical Indicator and I lost all my money in my account. I am now registered with Icarus and I now understand how critical is fundamental knowledge in forex trading.
Hi Daisy, welcome aboard. Feel free to let us know if you have any questions.
Hello, what is hedging?
Hi Saadg, this might help.
Very correct Chris. Most novice traders have the wrong way round. Indicators are just a ‘plus’. Understanding the fundamentals is the most important thing. Most novice traders continue to lose money because they think something is wrong with the indicators they use. Thus they’re forever in search of that holy grail indicator that can’t go wrong, not realizing that they need to learn the fundamentals of trading first. Even indicators that come with the MT4 is good enough as long as one understands the fundamentals of trading. You don’t need to go searching for third party indicators.
Chris your blog post can be long or short. It depends on the point you want to convey to the reader.
Thanks for the feedback Okeke, I appreciate it.
What is your YouTube channel
Hi Chris, I beg to slightly differ. It all depends on the trading timeframe used and trading style, for example, scalping or position trading. It would be right for a position trader to focus on fundaments but if a scalper is married to the fundamental outlook rather than exploiting the short term sentiments in the market, for example, overbought or oversold markets, he/she is less likely to make money from trading. As a successful trader, one should be able to ride ‘horses for the courses’!
Hi Aryan, I would consider sentiment as a component of the fundamentals because after all, sentiment is based on an opinion about it.
Where can I find the best information regarding economic fundamentals? I need training in this area.
Hi Sherron, a free (but more tedious) way is to go to a local library and borrow a book on macroeconomics, or international economics and read up on the topics of GDP, inflation, currencies, etc. A non-free (but easier) way is to join the Icarus course.