Yes, it is an age old argument in equity markets and the forex (FX) market is certainly not immune to the same debate. However we are increasingly seeing traders opt for a combination of both as technical analysts acknowledge the important part market fundamentals play in price activity of a currency and vice versa. For example, price reaction to economic indicators such as Non-farm payroll data from the United States or an interest rate decision has the propensity to shift market sentiment thus resetting price action on a currency pair.

Likewise, fundamental traders acknowledge the importance of technical mile stones such as past price activity which shows particular areas of support and resistance, or whether a currency is overpriced relative to the past trading activity. Technical signals can also bode well for a short term trader looking to take advantage any perceived anomaly in price activity or follow a basic trend.

On the other hand, a fundamentalist can use a currency to take a longer term view of the relative economic health of each country. Whatever the case, you’re always going to have staunch supporters of particular methods and if you’ve got more winning trades than losing you’re on the right track.

Trading the foreign exchange market profitably is hard but also can be rewarding. There are no guaranteed proven methods to assist investors but many successful traders adopt a simple disciplined approach and stick to the important rules of trading. These rules may seem easy to follow but in practice emotions when trading can run high.

Remember to run your trading account like you would your own business, keep rational and by following the rules below hopefully you will keep profitable.

If you want to know more about Foreign Exchange, you can sign up here for a free copy of Introduction to Foreign Exchange from GO Markets from which this article has been taken.