Well Balanced Trading
The most beneficial style of trading is one that is well-balanced. This means that even if you rely mainly on charts and patterns (technical analysis), you need to incorporate fundamental and sentimental analysis into your trading repertoire as well. This will allow you to see the bigger picture of a currency’s actual potential. Limiting yourself to just one method of analysis is like swinging at a baseball with one eye closed—your perception will be way off and you will more than likely miss.
This doesn’t mean that you need to devote your whole trading day to analyzing these things. You can always use the elemental trader to see other ideas. Just a few minutes spent on the opposite method of your natural inclination will open your eyes. Start your day by reading blogs and studying economic indicators; this will let you know what the home nations of the currencies you wish to trade are going through and how their currency value is likely to respond. It will also give you a view of how other traders perceive these events. By establishing what an economy is like and what other traders are planning on doing in response, you can begin to establish your own developed position.
Once you see the bigger picture, it is okay to go back to your preferred method of trading. Use the fundamentals as a framework for how you will perceive technical indicators. If the two methods of analysis are in agreement, you will be much more likely to have a winning trade. If the two don’t match up, you will want to be more cautious with your trading.