“The Market Storyteller” Koichiro Ameya’s Fundamentals Lecture You Can Understand from the Basics | Part 2: Why Technical Analysis Alone Is Not Enough
In FX, many people use technical analysis for market analysis, but fundamental analysis is also indispensable for accurate market analysis and judgment. Here, we will have Koichiro Amaya explain the depth and application of fundamentals, so let's learn properly together with the trend-following Icchan.
Instructor: Koichiro Amaya
Amaya, Koichiro. For over 20 years, he has held key positions in foreign exchange operations at major foreign banks such as UBS, JP Morgan, and BNP Paribas. He has a background of ranking highly in the Tokyo foreign exchange market as a popular dealer in the financial magazine “Euro Money.” In 2006, he became a freelance financial analyst and now provides FX companies and portal sites with his sharp, unique perspective on currency market information.
Participant: Icchan the Trend-Follower
Icchan the Trend-Follower. Keppie, a devoted student and beloved younger disciple of Ketti, a mother of twins. He loves trend-following and is active to convey its excellence. But sometimes he also does contrarian trading.
Official site：Icchan the Trend-Follower FX ~ Real trades fully disclosed ~
※ This article is a reprint/edit of an article from FX攻略.com July 2019 issue. Please note that the market information written in the main text may differ from the current market.
Trade with a Big Picture View, not just Technicals
IcchanLast time, we learned how important fundamentals analysis is. In trading, it seems better to combine both technicals and fundamentals rather than valuing one over the other.
AmayaThat's right, but among technical enthusiasts there are people who think, “The chart prices in everything, so technicals alone suffice,” or “Fundamentals should be completely ignored.”
IcchanI’ve also seen such people around me from time to time.
AmayaThere is some truth to that, but I believe you cannot forecast with technical analysis alone. To make it concrete, let's use a coin-toss example. If you flip a coin four times and get heads all four times, what do you think the fifth time will be?
IcchanHmm, heads?
AmayaIndeed, heads again (laughs). Trend-following and technical believers tend to think, “Since heads appeared four times in a row, the next will be heads.” Conversely, contrarians tend to think, “Since heads have appeared four times, the fifth should be tails.” But upon careful thought, whether it’s the fifth or the tenth, the probability of heads and tails is always 1/2. A chart merely reflects probabilities of A leading to B, B leading to C; it does not predict the future. It only derives probabilistically favorable outcomes. Therefore, it is not suited for making logically certain future predictions. Also, relying on technical analysis alone will eventually stop working. Even if a method works temporarily, it won’t continue to work in the long term, and you will eventually fall into a slump.
IcchanSo, there is no dream-method that guarantees long-term consistent winning.
