Whether to be fundamental or technical has long been on debate, however retailers can't go after any since they are always in cloud of news noise or tied up with indicators.
Most successful traders around the world are fundamental or technical and can't follow both and as traders we have experienced the time when the news has been in favor of a currency and it has lost weight or technically we look for a reversal, however the trend has continued. The question might be " how would we shorten the risk?"
There are several rules to have in mind and most importantly you need to stay with mass capital in the market therefore economical situation of a country whose currency you are to buy must be considered but you need to avoid noises here after, what matters from economical point of view is the group of figures which show productivity as; GDP, CPI, Unemployment rate, and Manufacturing PMI. These figures don't change massively and by studying them on annual base and quarter base you can have a clear picture of strong economies around the world so you can have a strategy frame for what to buy and what not to.
After having an image of a country economy you need to figure out what drives the currency pairs. Whatever the state of a country is Central Bank of that country plays a key role in the value of that currency and it's good to know that the CB policies don't change on and off and to follow their view and their whys they are so predictable, for instance the US FED has confirmed to stay USD value gaining to have CPI more than 2.0 and this policy won't change as far as we have Ben Bernanke in his position and certainly they won't meet the target in 2013, or as another example Jordan from Switzerland Central Bank has confirmed that CHF won't appreciate against the EURO and it won't change in short term either. Central Banks policies are very important in trading currencies especially this time that many bankers warn Currency war, however we need to bear in mind that not any country is free to drive the value wherever it likes since the IMF, international monetary fund, has the role of monitoring and balancing the market, so knowing IMF point of view makes the whole picture more clear, for example when USDJPY was at 90 Japan central bank was claiming that JPY was strongly overvalued but since the IMF declared that it was not highly overvalued it continued gaining for some time.
Drawing the image of a longer term is necessary for a trader since his/her capital is limited and trading strategies don't succeed if they go against market capitals.
From the technical point of view if you want to run a system which holds the least risk you will need to consider all types of indicators instead of several indicators from one group, I mean you will need to choose an indicator from each group of; Trend, Oscillation, and volume. A mix of all three which give similar signal will help you go with the most technical s and gain the most.
After all, we all know that the market is not and won't be 100 percent predictable so setting SL is essential, if a trader enters 100 trades with 99 percent gaining, a mistaken trade without SL will be enough to blow his/her account. There are several articles around about how to set an SL and I win't discuss it here however according to its importance I will put it on another article.
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