Both
technical analysis and
fundamental analysis represent
vital practices for traders, capable of dramatically impacting earning prospects. Analytical work is so important that its absence precludes the possibility of generating profits and forces traders to operate blindly or, worse, integrate the dynamics of gambling into their investment activities.
It is essential to practice technical analysis and fundamental analysis to the best of one's ability. The first step in doing so is understanding the necessary (but not sufficient) condition for an analytical practice worthy of this name. We discuss this in this article, providing guidance on how to identify the primary resources of both analyses:
information.
The importance of news in fundamental analysis
Fundamental analysis is the study of what happens outside the market, with a view to forecasting, or rather estimating, future price movements. At a basic level, it involves following events, predicting their outcome, and
imagining the impact on the market. The founding principle of fundamental analysis consists of the interdependent relationship between the various spheres of the economy, finance, and politics. Potentially, everything can affect prices, but particularly certain events - often periodic - that take the name of market movers. Each asset has its own set of market movers that exert a marked influence compared to all others.
Now, it's obvious: if fundamental analysis consists of studying what happens outside the market, the only way to fulfill the analytical practice is to continuously and purposefully obtain certain information.
Knowing the statements of intent of a central bank means intuiting the outcome - for example - of the future interest rate decision, and using this data to estimate price trends. In general, market movers can be studied, at a superficial glance, directly in the
economic calendar, which always clearly lists the coordinates of individual events (day, time) and also provides the previous survey data and a summary of what experts expect. An excellent and precise economic calendar is offered by
Dukascopy Europe.
But market movers are also irregular events that do not appear on the economic calendar. This refers to statements by the governor of this or that central bank, by this or that prominent politician, by possible dramatic events in an area fundamental to the production and trade of certain assets linked to a specific currency, etc.
Hence the importance of news, in the strict sense. Hence the need to stay informed beyond a quick reading of a couple of numbers on the economic calendar. Now, there are several specialized sites that offer constantly updated feeds. The advice, however, is to also take advantage of
any information services offered by the broker, useful because they do not break the continuity of trading and are immediately accessible.
The importance of news in technical analysis
But news also assumes a certain importance for technical analysis. In fact, it is not only political, economic, financial (and even social) events that happen outside the market that affect the market. Above all, it is the events that happen
inside the market, i.e., the dynamics of trading, that have an impact. There is nothing particularly strange about this: the law of supply and demand is still a basic principle. There are two possibilities, which in truth do not exclude each other: following the analyses of other experts or producing the analysis completely autonomously. In this paragraph, we will discuss the first possibility.
A possibility that should be exploited, especially if you are not an expert. If you know how to search well, in fact, third-party analyses are effective and more correct than those that retail traders can perform.
Obtaining first-hand information
It is obvious, however, that third-party technical analyses cannot suffice. Also because they may not fit perfectly with all trading activities. On the contrary, precisely because they are aimed at the public, these are often quite generic, useful for getting an overall view, for understanding in which direction the market is likely to go. To place an order, to develop a trade, and even just to hope to make a profit, much more is needed.
Specifically, it is necessary to
personally engage in technical analysis, that is, to study the market to obtain information that perfectly matches one's needs, that is consistent with one's strategy, and compatible with one's approach. Of course, it is not simple; in fact, it is decidedly more inconvenient than using others' analyses, but it is an unavoidable step (moreover, regular and continuous) that all traders must take.
Learning to do good technical analysis personally is possible and necessary. Of course, it takes time and, if you don't have the basics, even
a lot of time, but it is a commitment that all traders can undertake. However, problems can come from the outside. Often, technical analysis turns out to be ineffective not because of errors by the trader or a presumed and possible lack of skills. Often the problem is related to the paucity of tools available, in a context where others cannot be procured, at least not immediately.
The reference is to the broker's offer of indicators, as well as the quantity and quality of tools made available. Some brokers perform excellently from this point of view, others much less so. In short, the landscape is varied. This makes it absolutely essential to choose a broker that meets your needs, especially from this perspective.
Now, the offer of brokers is truly abundant. The advice is to focus on those with the highest reputation, without looking for opportunities that often turn out to be smoke and mirrors. Among the brokers worth trusting,
Dukascopy Europe stands out. They provide everything necessary for perfect technical analysis; the abundance of indicators, oscillators, tools, and newsfeeds is remarkable, far superior to the average of mid-to-high-end brokers.
In reality, the reasons for choosing Dukascopy Europe go far beyond the offer for technical analysis. It is, for example, one of the very few brokers that combines the accessibility of market makers with
ECN technology. This means minimal spreads, close to zero, but also the ability to view the market in its depth and trade with real prices.
