There are two major methods for trading forex: fundamental and technical.
Fundamental analysis relies upon a broad and near-expert understanding of multi-national macroeconomic statistics and events.
Fundamental traders believe that the value of a pair is determined by the underlying health of the two nations involved in the pair. A high value for
GBPUSD, for example, would suggest a better economic outlook in Britain vis-à-vis the United States. Global events like news, catastrophes, politics or economic shocks all play a role in determining price.
Technical analysis is based on the mathematical analysis of price, and of many variables which all derive from price. Technical traders believe that technical indicators include fundamental analysis and also provide repeatable, tradable patterns. Technical traders use charts to determine support and resistance, draw trend lines, or analyze measures like moving averages, etc.
camp you belong to determines your trading approach. A fundamental trader may take the Warren Buffet approach and buy-and- hold a pair, expecting long term returns. A technical trader may play long term as well, but usually day trades. Some fundamental traders trade on news, which may just be certain days of the month.
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