Key takeaways
- Fundamental analysis explains why a market moves: interest rates, inflation, growth, central banks and risk appetite.
- Technical analysis tells you when and where to act: levels, structure, entries and the point where you are wrong.
- Markets react to the surprise, not the number. What matters is how a release compares with what was expected.
- Used together: fundamentals give the bias and the event risk, technicals give the entry, stop and target.
What each one is
Fundamental analysis looks at the forces behind price: interest rates, inflation, economic growth, employment, central bank policy and the general appetite for risk. For a single company it means earnings and valuation. For indices, currencies and commodities it mostly means the economy and the central banks.
Technical analysis looks at price itself: trends, ranges, support and resistance, market structure, and tools like market profile. It assumes that what traders are doing shows up on the chart, and that some patterns repeat often enough to be useful.
What fundamentals tell you
Fundamentals answer "which way is the pressure pushing, and why?" If inflation keeps coming in above expectations, markets expect interest rates to stay higher for longer. Higher rates tend to support a currency and weigh on growth stocks, so the Nasdaq and the US dollar react. That gives you a bias, and just as importantly, a list of the days when the market is likely to move hard.
What fundamentals don't give you is timing. A market can be "obviously" overvalued for months. Knowing why it should move doesn't tell you where to enter or where you're wrong.
What technicals tell you
Technicals answer "where, and when?" A level where price has reacted before, a break in structure, a pullback into a gap: these give you a precise entry, a place for the stop loss, and a target. That makes risk measurable, which is the whole game.
What technicals don't give you is context. A perfect setup the minute before a major data release is a coin toss. Plenty of chart traders lose money not because their analysis was bad but because they didn't know the news was coming.
The key idea: markets trade the surprise
Before every major release, economists publish a forecast, usually called the consensus. If US inflation is forecast at 3.0% and comes in at 3.0%, the market has largely priced it in and may barely move. If it comes in at 3.4%, that surprise is what moves price. This is why "good news" sometimes sends a market down: it was good, but not as good as expected.
How to combine them
- Weekly: check the economic calendar. Which releases are high impact, when are they, and what's expected?
- Bias: what is the bigger story? Are rate expectations rising or falling? Is the market in a risk-on or risk-off mood?
- Levels: mark the technical levels that matter on your market: prior highs and lows, value areas, obvious support and resistance.
- Timing: take setups that line up with the bias, at your levels, and stay out of the minutes around high-impact releases unless trading them is part of your written plan.
That's the core of how GRIT is taught: fundamentals first, technicals for timing.
Common mistakes
- Trading a technical setup straight into a scheduled release.
- Using fundamentals as a reason to hold a losing trade ("it has to go up eventually").
- Reacting to the headline number without checking it against the forecast.
- Adding more indicators to fix a problem that is really about context.
Sound like you?
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Quick answers
Which is better for beginners, fundamental or technical analysis?
Beginners usually find technical analysis easier to start with because it's visual and rules-based. But learning which events move your market early on saves a lot of losing trades, so it's worth learning the basics of both from the start.
Do day traders need fundamental analysis?
Day traders don't need to value companies, but they do need to know the economic calendar. A single high-impact release can move a market more in a minute than in the rest of the session.
What does "priced in" mean?
It means the market already expects something and has moved to reflect it. When a result matches expectations, there's often little reaction. Price moves most when the result is a surprise.
Education only. This guide is general education, not financial advice or a recommendation to trade. Trading carries a high risk of losing money and most retail traders lose money. Examples are illustrations, not trade ideas.