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.