The pure technical traders will tell you the most critical element in trading is technical analysis and the fundamental factors are of little significance and their effect subsumed within the charts. They could be right in holding this view and could equally be wrong. To demonstrate the importance of fundamental I will explain three charts.

The first one is EURUSD. The area highlighted in red is what happened 4 weeks before currency fell about 1880 pips following the Greece debt crisis. I remember that for many weeks the prevailing views were that Greece debt crises will send the Euro tumbling. The impeding doom hung in the air for several weeks. When the debt situation was finally confirmed, EURO fell about 1880 to it lowest point of 2005. This is a clear demonstration of how fundamental factors can determine the fate of a currency.

The second chart is gbpjpy and the important point is the daily candle for 6th of May 2010. The day the result for UK parliamentary elections resulted in hung parliament (no clear majority). The possible impacts of the election dominated both electronic and print media weeks before the result became known. When the result eventually came out the currency fell by 1716 pips in a single day. This is a further demonstration how fundamental factors can determine the fate of trader.The third chart is gbpusd and the candle to note is the daily candle for 6th and 7th of May 2010. Just like the gbpjpy and the result for UK parliamentary elections which resulted in hung parliament on the currency. The possible effects of the election dominated both electronic and print media weeks before the result became known. When the result eventually came out the currency fell by 672 pips in two days. This is a further demonstration what fundamental factors can do.


These above are mere illustrations, there are other fundamental factors. My view is that the big guys could afford to rely solely on either fundamental or technical factors to guide their trading strategies, because they have the deep purse to wriggle out of trouble. However, for the small players with limited fund it is important to understand that two sides to coin. Understanding fundamental and technical factors will greatly improve the success rate of the retail traders in the highly complex forex world.In my next posting I will summarise the critical factors in my trading strategy and post some of my results so far. Thereafter, I will try as much as possible depending on my schedule to provide a weekly trading plan on this thread. The second chart is gbpjpy and the import point is the daily candle for 6th of May 2010. The day the result for UK parliamentary elections resulted in hung parliament (no clear majority). The possible effect of the election dominated both electronic and print media weeks before the result became known. When the result eventually came out the currency fell by 1716 pips in a single day. This is a further demonstration how fundamental factors can determine the fate of trader

The second chart is gbpjpy and the import point is the daily candle for 6th of May 2010. The day the result for UK parliamentary elections resulted in hung parliament (no clear majority). The possible effect of the election dominated both electronic and print media weeks before the result became known. When the result eventually came out the currency fell by 1716 pips in a single day. This is a further demonstration how fundamental factors can determine the fate of trader