There is one thing that unites all traders: they want to make a profit. And although the profit is not guaranteed, the way they go about it varies greatly. In this short article, we will discuss the two main trading styles: technical and fundamental, and how they differ from one another.
Technical traders
Technical traders perform technical analysis, meaning they analyse charts using indicators. This type of trader focuses on patterns and trends, as well as market data such as price, volume and open interest.
They would add indicators to their charts, ranging from trend lines and fractals (bullish and bearish price patterns), moving averages (to show price trends), oscillators (like MACD or RSI) and other tools to make decisions about when to buy or sell assets based on their historical performance.
These indicators are particularly useful for identifying trends in an asset price over time and predicting how these trends might change in the future (for instance, if an indicator shows that an asset is overbought or oversold).
This type of analysis can help technical traders determine whether it’s time for them to enter into a position or exit one that they have already opened – which is why so many people choose this approach!
Fundamental traders
The second type of trader is the fundamental trader. Fundamentalists look at the news for information about companies’ performance as well as other factors, such as economic indicators or company’s earnings reports, dividend payments or even stock splits.
By looking at things like earnings reports from companies, fundamental analysts can determine whether or not it’s worth trading that stock. They will also take into account economic indicators like GDP or NFP reports, or unemployment or growth rates for signs about future growth prospects of an asset for different countries around the world.
These two approaches to trading are not mutually exclusive. You can be a technical trader who also focuses on fundamentals or a fundamental trader who uses technical analysis as well. It’s really up to you!
As you can see, these styles are very different from one another! Which one do you prefer? You can open a free demo account with Fondex cTrader and practise risk-free.
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