The Importance of Combining Fundamental and Technical Analysis
Fundamental analysis is
ideal for long-term investment plans. Technical analysis is best for short-term
trading and for gauging trade positions entry timing.
Combining fundamental and
technical analysis gives you a taste of both worlds. Also, using both analysis
gives you the bigger picture and you are able to make more informed trading decisions.
Actually, some technical analysis work well when combined with fundamental
analysis to provide more comprehensive data to inform trading decisions.
Notably, making use of both methods is an appropriate tool to help you in both the
short-term and long-term planning of your investment.
Why combine both analysis?
A combination of both
analysis helps you the trader gain richer insights on the markets and predict
the direction the trend is likely to move. Also, some of the technical analysis
work well when complemented with fundamental analysis. In essence, combination
of the 2 analysis will provide you with a holistic trading strategy that contributes
to better trade choices.
Ideally, fundamental
analysis guides your decision on which currency to trade in as a trader or
companies to invest for the investor, while technical analysis gives you the
timing of when to enter a short or long position. One thing for sure is that
using both analysis builds your confidence in the world of trading.
Cons
of combing both analysis
Of course combination of
both creates a double power, but it’s not a guarantee strategy for dodging the
risks involved in the trading business. The only thing the combination
guarantees is a better analysis of the market to avoid the mistakes of entering
the positions at the wrong timing.
In a nutshell, it’s
better to try out both methods and know what works well for you and to help you
build your trading strategy and plan that works well with your personality.
0 Comments