[tippy]

ItalianFX, what was your Merrill friends basis for suggesting we are at a disadvantage in Forex?

I've found that technical analysis just doesn't cut it in trading Forex. The only way to succeed is to supplement that TA with a good base in the fundamental workings of the Forex market. The actual currency pair you are trading is simply the final piece of a sequence of events (if that makes any sense). You can TA the Eur/Usd pair to death, but if you don't know the rest of the picture leading up to the final TA, it is all useless.

Any trader in Forex should have a working knowledge in ALL major market areas and understand the intermarket relationships between those areas. Trading currency without using the associated markets is just impossible in my opinion.

1. commodity markets (gold, base metals, CRB index, GSCI index, JOC-ECRI index, oil)

2. bonds/rates (spreads, yield curve, inflation rates, Fed thinking, Fed Funds, bond prices/yields, foreign bond prices/yields, ECB thinking, other foreign central bank policy, foreign economy economic indicators)

3. equities (sector rotation, rate sensitive sectors, inflation sensitive sectors, gold mining shares, oil shares, banking shares, futures instruments, foreign equity markets)

4. other currencies (carry trades, correlative relationships)

5. domestic economic indicators (too many to list)

6. Geopolitical events (wars, weather, natural disasters, terrorism, etc.)

These are just the major areas. Each of these markets affect other markets. No matter how good your TA of the Eur/usd looks, if these other markets don't lead up to that last piece of the puzzle and confirm it, then the TA is useless.

TA is pretty much just a tool to fine tune your entry point based on a whole host of other fundamental factors.