NOTICIAS FOREX

You have positions open, and the margin level percentage at the bottom of your platform keeps sliding. Nobody told you at what number things actually go wrong, or whether the right move is to act now or sit still. That uncertainty is the problem this article removes: how to calculate the percentage, what it means, what counts as safe, what happens when the key levels break, where to find it on MT4 and MT5, and how to pull it back into the safe zone. Margin level is your account's equity relative to used margin, expressed as a percentage: equity divided by used margin, times 100. Your broker reads this number to decide whether you can open new trades, when you receive a warning, and when positions are force-closed. The higher the percentage, the more buffer your account has. If you have never watched the number move, open a small position on a demo account and leave the Trade tab visible for an afternoon while the floating profit and loss pulls it around. Ready to keep your own margin level in the safe zone? The margin level formula takes two numbers you already have and turns them into one percentage: Margin level = Equity ÷ Used margin × 100 The calculation runs as a chain, and each link depends on the one before it. One worked account carries through this whole article, so the figures below are illustrative but consistent. Step 1: work out the required margin for the trade. Buying 1 standard lot of GBP/USD means controlling £100,000 of notional value at 1:30 leverage. Required margin = £100,000 ÷ 30 = £3,333.33 Step 2: add up the required margin of every open position. With this single trade open, used margin is £3,333.33. Step 3: take your current equity. The account started at £10,000; with the position 250 pips underwater at an illustrative £8 per pip, the floating loss is £2,000 and equity sits at £8,000. Step 4: substitute into the formula. Margin level = £8,000 ÷ £3,333.33 × 100 = 240% A quirk worth knowing: with no positions open there is no used margin, so the platform shows zero or nothing at all depending on the terminal. Nothing is wrong there; the formula has no denominator yet. Margin level in forex is the percentage of account equity relative to used margin, and it measures one thing: how much buffer stands between your account and your broker's intervention lines. A reading of 240% means equity covers the locked deposit 2.4 times over. The lower the percentage falls, the closer the account moves to the warning line and, below that, the stop out line. The number never sits still. Every tick of price changes your floating profit or loss, floating profit or loss changes equity, and equity changes the margin level. Your positions can stay untouched all day while the market moves the percentage for you. On the way down it passes a series of gates: buffer comfortable, buffer shrinking, too little free margin for new trades, warning notification, forced closing. At the early gates every choice is still open. At the last one the system is choosing for you. Margin level meaning gets muddled because four account terms travel together. The table separates them. Balance ignores your open trades entirely, which is why an account can show a healthy balance while the margin level is collapsing. Equity is the honest number, used margin is the locked one, and margin level is the ratio the broker watches. The wider basics of margin and equity sit in our margin guide. Read more：What Is Margin in Forex Trading and How to Use It? Here is the same account played all the way to the end. One position, 1 lot of GBP/USD, used margin fixed at £3,333, and a market that keeps going the wrong way. The warning line in this example sits at the common setting of 100% and the stop out at 50%; both vary by broker. Follow the slide in pips. A move of 250 pips against the position costs £2,000 and drops the level from 300% to 240%. Uncomfortable, nothing more. At roughly 750 pips the floating loss reaches £6,000, equity is down to £4,000, and the free margin left over is about £667. Not enough to open anything meaningful. Around 833 pips, equity exactly matches used margin and the platform issues the margin call. If the slide continues to roughly 1,042 pips, equity is half the used margin and the broker starts closing the position at market. Every row is the same formula from the calculation section with one number changed. A caveat: when price gaps over a weekend or a news release, the level can jump from the caution zone straight through the warning line without pausing at it, and no notification arrives in time to act on. There is no single number that fits every account, because a safe margin level shifts with leverage, strategy and market conditions. What a scalper on high leverage can tolerate for an hour would keep a swing trader awake for a week. That said, traders work with reference zones, and the bands below are a widely used starting point. Why does the same percentage mean different things to different traders? Because the speed of burn differs. A high-leverage position turns a routine 50-pip swing into a large equity move, so a 250% reading can decay in minutes. A small position on low leverage might drift between 400% and 380% all week. The percentage tells you the distance to the lines; your leverage decides how fast that distance closes. The rule that actually protects you is one you set in advance: write your own minimum tolerable level into your trading plan, and when the number touches it, execute the action you agreed with yourself. A common version is a personal floor well above the broker's lines, say 200%, paired with one fixed response such as cutting position size the same day. Read more：What Is Leverage in Forex and How Much Should You Use? The margin call level and the stop out level are two separate lines, and the difference is who acts. The margin call is a notification: your broker tells you the buffer is nearly gone and asks you to add funds or reduce positions. The stop out is an action: the system closes your positions for you without asking. A stop out is the automatic closing of open positions by the broker once the margin level falls to a preset floor. It exists to stop a losing account from falling below zero. Both lines are broker-dependent, so check your own account's contract terms rather than assuming the common settings. For retail CFD accounts in Europe, regulators standardised the close-out rule at 50% of required margin under the ESMA product intervention measures. The full playbook for staying clear of the warning line lives in our margin call guide. Read more：What is a margin call? 5 tips for UK traders to avoid it Everything that lifts the margin level works on one side of the formula or the other: push equity up, or pull used margin down. Four moves cover almost every situation. A deposit lifts equity directly while the denominator stays put. It is the fastest of the four, and the only one that needs no market decision, but it calls on money from outside the account. A partial close releases used margin and locks in part of the loss. The denominator shrinks, the percentage recovers, and no fresh money is involved. Smaller new positions are the preventive move. The same market swing uses up far less headroom when each trade locks less margin, which keeps the whole problem from starting. Stacking positions in one direction inflates the floating loss and the used margin at the same time, so the ratio deteriorates from both ends. When the level is falling, this is the first habit to stop. The two rescue moves carry very different price tags. Take the account at the deep-loss snapshot: equity £4,000, used margin £3,333, level 120%. Restoring 300% by deposit means bringing equity back to £10,000, which costs £6,000 of fresh money while the full position stays at risk. Closing half the position instead releases £1,667 of margin without a penny deposited; the cost is crystallising £3,000 of the loss. Deposit route: £10,000 ÷ £3,333.33 × 100 = 300% Partial close route: £4,000 ÷ £1,666.67 × 100 = 240% The deposit keeps the full position running with more money committed; the partial close needs no new money and accepts part of the loss instead. Margin level in trading platforms lives on the account summary row, and the value only appears while positions are open. On MT4: On MT5: On the mobile apps the figure sits in the account information block at the top of the Trade screen. Wherever you read it, check the number at the start of the session rather than waiting for the platform to warn you. Read more：MT4 and MT5 Trading Platforms Put a real margin level on your own screen: When the level falls through the key lines, the consequences arrive in a fixed order: Every item on that list can be avoided before it triggers, using the four moves in the section above. Margin level is a risk-management percentage that shows the health of a trading account by comparing total equity to the used margin. The number moves in real time with floating profit and loss, so it changes even while your positions stay untouched. The four-term table shows how it relates to balance, equity and used margin. A healthy margin level in trading is generally kept above 200%, and many traders aim for 300% to 500% of headroom to absorb normal market swings, while a drop to 100% usually triggers a margin call. The safe value shifts with leverage and strategy, so treat the zone table as a starting point for your own floor. The margin level formula is the ratio of your account equity to your used margin, expressed as a percentage: Margin Level = (Equity / Used Margin) x 100%. With £8,000 of equity against £3,333.33 of used margin, the level is 240%. No, margin and leverage are not the same thing, though they work together closely when you trade. Leverage sets how large a position you can open, margin is the money locked to hold it, and margin level is the percentage measuring account health. The higher the leverage, the faster the level falls in the same move. It usually means no positions are open and no margin is in use, so the platform shows zero or a blank field. The account is fine; the formula simply has no denominator until a position opens. In business accounting the word means profit margin, the share of revenue left after direct costs. In forex it is different: your margin is the deposit locked by your open positions, and it sits in the platform's account row right next to the margin level percentage. From here you have the full toolkit: the formula, the gates the percentage passes on its way down, one account played from 300% to a stop out, the reference zones, the two broker lines, the four moves that raise the number, and where it lives on MT4 and MT5. If you keep one thing, keep this: write your minimum tolerable level into your trading plan and act the moment it is touched. Then check the number at the start of every session, before the charts. The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Deeper into margin: Related concepts:

On the 21st of September 2026, Nike will be kicked out of the S&P 100 after an 18-year stint, following a disastrous streak on the New York Stock Exchange. The famous shoemaker, founded in Oregon back in 1964, first went public in 1980 under the ticker NKE. Years of consistent growth would eventually see the company invited into the esteemed S&P 100 club in the year 2008. Unfortunately, in just two short weeks, its membership within the prestigious index will come to an end. The S&P 100, which actually includes 101 companies because of Google being difficult (GOOG & GOOGL), is a hand-selected index of the most established companies within the wider S&P 500. Far from simply grouping the 100 largest companies by market cap, the S&P 100 accounts for sector balance and financial durability. This ensures that the index represents a broader spectrum of the stock market overall, while remaining somewhat stable over time. The committee responsible for such decisions rebalances the index four times per year and will typically swap out no more than 1-2 companies per quarter. The current round is an outlier in that four different names are facing the chop: Nike (NKE), Colgate-Palmolive (CL), Honeywell Aerospace (HONA), and Simon Property Group (SPG), to be replaced by Dell Technologies (DELL), Palo Alto Networks (PANW), Arista Networks (ANET), and SanDisk (SNDK). A rotation of eight different companies certainly makes the September rebalancing operation one of the more impactful in recent times, but the demotion of Nike adds an element of nostalgia to the event. Nike’s catastrophic performance on Wall Street over the past few years has forced the committee to reevaluate the company’s position within the index. The chart speaks for itself: from a high of $179 per share in November 2021 to a 12-year low of $38 as of yesterday evening – a 78% drop that has erased $200 billion in market capitalisation. So why has NKE fallen so precipitously? There are a few different answers, but the main point that sticks out is the company’s attempt to pivot away from retail floor space to prioritise its digital stores. With Nike gone from many shelves, competitors quickly seized the empty space and filled the vacant aisles with their own products. As the Covid lockdowns wound down around the world, consumers returned to physical shops only to find that Nike was conspicuously absent. To make matters worse, the innovation gap between Nike and its rivals has continued to widen, gradually weakening the competitive moat that the company previously enjoyed. Another major culprit is the downturn in the Chinese market, which saw revenue fall by 30% between 2021 and 2026. Rather than rely on local marketing teams to properly gauge sentiment within the target audience, Nike maintained a centrally controlled decision-making structure, which utterly failed to resonate with Chinese consumers. Other comparable brands avoided the same fate thanks to more flexible approaches, which resulted in more widely received merchandise. The third, and more controversial, reason is that the brand may have focused too narrowly on certain demographics, putting off large swathes of the general population in the process. Targeted advertisement campaigns over the last decade did not sit well with large parts of the public, splitting different groups along political and cultural lines and alienating formerly loyal consumer bases. For a company that makes shoes and other sports apparel, brand image is everything. Shunning the majority was a controversial strategy that the current management openly admits was a mistake. Former CEO Elliott Hill retired from Nike in 2020, but the 32-year veteran at the company was brought back out of retirement in 2024 to address many of the problems discussed above. The new management freely acknowledge that the previous attempt at demographic sorting damaged the brand and is currently attempting to reorient the company back to its roots; a process that may take many years to see through to fruition. It is worth looking again at the companies being welcomed into the S&P 100 index: Dell, Palo Alto, Arista and SanDisk. All four are tech companies. All four are intimately connected to the AI sector. Nike’s symbolic fall from grace distracts from a potentially more interesting facet of the story: that US markets are increasingly dominated by the tech sector. Information technology alone now accounts for 44% of the S&P 100 index by market cap weight. For the S&P 500, the figure falls only slightly to 38%. For context, in 1990, the figure was roughly 7%. #S&P100 #NIKE

Wall Street received quite the surprise last Friday in the form of a bombshell NFP report, which indicated a whopping 162,000 new jobs added to the US economy in August, demolishing expectations of just 56,000. Beyond the headline figure, revisions to the June and July figures swelled prior estimates by a combined 55,000 jobs. There was more solid news to be found on the joblessness side, where the headline unemployment rate remained steady at 4.1%, but more importantly the broader U-6 rate dropped from 8% to 7.7%. The labour force participation rate also ticked up slightly to 61.6%, meaning the fall in unemployment is not simply due to people giving up on finding work. All-in-all, the report was unusually strong, so much so that the implied odds of a rate hike next week have moderately increased from 50% to around 60%, while bond yields finished the session noticeably higher. For all the movement behind the scenes, markets were unflustered by the report. The US dollar made marginal gains as currency markets digested the news, but the DXY remains somewhat off the 100 point threshold. US equities showed minor signs of weakness, as did precious metals, leaving gold and silver roughly 1% down by the end of the day. Bitcoin shied away from new highs but clung on to $80,000 per coin throughout the weekend and into this morning. Even oil prices have showed very little motivation in going anywhere over the last few sessions, with the Brent Crude benchmark stubbornly hovering around $96 per barrel but venturing no further towards three-figure territory. Everyone is waiting for the next catalyst to jolt markets into action; they may have to wait a little longer. Traders can expect very thin order books going into today’s session due to Canadian and US stock exchanges being closed for Labour Day. Holidays aside, the economic calendar will not get spicy until much later in the week, starting with an interest rate decision from the European Central Bank on Thursday, which is expected to result in a 25-bps hike for the euro. Inflation is proving just as sticky in the common currency area, and some analysts are now predicting that the ECB will enact two rate hikes before the end of the year. In the first of two inflation readings on the US economy, Thursday will also see the publication of the August PPI figures, which are forecast to show a 0.3% increase in producer prices month-over-month. The bigger story of the week will arrive a day later with the release of the latest CPI data, which has been notoriously difficult to predict in recent months. A strong labour market coupled with high inflation will seal the deal for a rate hike next week, and the first condition has already been met. The latest UK GDP figures will also materialise on Friday, which may play into expectations for the Bank of England’s interest rate decision next week. Friday’s US inflation reading will be the major event of the week, which may leave many traders sitting idle until the pivotal moment arrives, particularly with market closures affecting North American markets today. On the earnings front, Oracle (ORCL) is the only company of note, reporting after the bell on Thursday. The company is down 18% year-to-date, and investors have yet to receive a convincing answer as to whether the software giant’s massive AI expenditures are translating into cloud revenue growth. #CPI #NFP #INFLATION

For anyone wondering why assets rose across the board on Thursday, look no further than Governor Christopher Waller. In an interview with Reuters yesterday morning, the Federal Reserve board member expressed confidence in current US inflation trends and even mentioned voting in favour of a rate hold during the next FOMC meeting. Waller claimed that the Fed is ‘finally seeing some signs of disinflation’, meaning that the rate of inflation, while still positive, appears to be slowing down. In one of the most forward-looking statements to date, the governor admitted that the Fed could afford to ‘give disinflation a chance’, adding ‘we can wait one meeting’. Waller even went as far as to say that underlying trends were actually ‘better than the core numbers suggest’, noting that the three-month annualised core inflation rate had dropped from 4.76% in February to 3.05% in July. The comments are somewhat in opposition to Kevin Warsh’s statements from last Friday’s speech at Jackson Hole, in which the Fed Chairman said that underlying trends had not meaningfully improved. The implied odds of a rate hike on the 16th of September immediately shifted following the interview, falling to around 50% compared to 64% before the segment was published. Currencies also reacted quickly to the change in expectations, causing the dollar currency index to lose over half a percent, dragging the DXY down to 99 points. Interestingly, the biggest major currency pair movement was in the yen, which gained almost 2% against the greenback on Thursday, lowering USDJPY down to the 155 range, the lowest rate in a month. Bank of Japan board member Hajime Takata came out with an equally unexpected statement on Wednesday, during which he claimed that the central bank needed to move nimbly to raise interest rates in order to combat persistent inflation risks within the island economy. While the Fed’s next decision is scheduled for the 16th of September, the BoJ will follow with its own decision just two days later on the 18th. The back-to-back rate calls, crammed into a narrow 48-hour window, are creating the perfect storm for the highly significant currency pair. Adding even more fuel to the fire, the Bank of England decision lies snugly between both. The prospect of not-so-high interest rates on the dollar sent precious metals upwards yesterday, with gold punching up to $4,473 per ounce and silver reaching up to $67. Cryptocurrencies were also keen on the change in sentiment, as Bitcoin pumped straight back up to $81,000 per coin, from just $77,000 earlier in the session. US stocks were similarly impressed, lifting both the Dow Jones and the Nasdaq-100 1.2% higher by the end of the day, while the S&P 500 lagged a little behind with a 1.1% gain. With no real developments coming out of the Iranian conflict, market participants will have their eyes firmly trained on the upcoming NFP release. A modest 56k jobs are expected, with unemployment remaining at 4.1%, fitting in with the accepted ‘low fire, low hire’ narrative currently pervading the US labour market. #FED #WALLER #NFP

On Wednesday, Chevron (CVX) announced that it will invest $7 billion across its Venezuelan joint ventures in a bid to double oil production to 600,000 barrels per day over the next five years. Chevron, which first started operating in Venezuela all the way back in 1923, is the only major US oil company still active in the South American nation. Working hand-in-hand with state enterprise Petróleos de Venezuela, S.A., Chevron currently exploits the Orinoco Belt and Zulia State oil fields, located in Central and Western Venezuela, respectively. As part of the new arrangement, Chevron has been assigned additional acreage in the Orinoco Belt, where the American giant is already well established, possessing a large infrastructure base of pipelines and refining facilities. The new oil fields, designated Carabobo-1 and Carabobo-2-South-A, will provide the new crude oil, which can be drawn out of the ground for under $20 per barrel, according to the company. The timing of the disclosure is striking, to say the least, arriving only a few days after President Trump announced a separate deal that would give US-backed private operators access to vast swathes of Venezuelan oil fields. The bilateral deal between the US and Venezuela is far greater in scope, but many details of the arrangement have yet to emerge. The United States has apparently been granted 100-year concessions to operate in 17 separate oil fields, which together account for 65 billion barrels of oil. To put the figure in context, such volumes represent 20% of Venezuela’s total proven reserves, which in turn represent 17% of the entire world’s proven crude oil reserves. The agreement will operate as a joint partnership between the US government and North American Blue Energy Partners (NABEP), a large private energy company controlled by the prominent Betancourt family. In terms of ownership, the Department of War’s Office of Strategic Capital holds a 35% equity stake, while the US government maintains veto power over appointments to the board of directors and ensures that the entire structure operates under US court jurisdiction. For anyone wondering what on earth the Office of Strategic Capital is, it was established in 2022 and is essentially the investment arm of the Pentagon. The partnership is expected to invest $100 billion to rebuild and scale up Venezuela’s decaying energy infrastructure, but exactly where this sum of money will come from is one of the fuzzier elements of the arrangement. NABEP estimates that production will ramp up to over 1 million barrels per day once everything is in full swing. The US will then have a guaranteed right to purchase 20% of all the oil produced by NABEP at production cost, while holding the right of first refusal to buy the remaining 80% in emergency situations. This 20% is expected to replenish the Strategic Petroleum Reserve back in the United States. One of the fascinating, but somewhat overlooked points about the new deal is that of the seventeen oil fields in question, five were previously exploited by Chinese firms, while one was operated by a Russian company. This becomes more interesting when taken together with reports that Venezuela is considering leaving OPEC. The situation becomes more interesting still when taking into account rumours that Venezuela could abandon its currency, the bolivar, in favour of the US dollar. Whether the latter eventualities materialise or not, the display of hard power is hard to ignore. The broader picture is becoming increasingly clear. Operation ‘Absolute Resolve’, carried out on the 3rd of January this year, was a clinically precise manoeuvre that resulted in the successful capture and extraction of Venezuelan President Nicolás Maduro. Nine months later, the operation is looking less like an isolated event and more like the opening chapter in a longer-term play. The US has seemingly secured a golden stake in over 3% of the world’s known crude oil reserves, while pushing out its main rivals in the process. In theory anyway. The reality on the ground may prove more frustrating. Venezuela is not an easy country in which to do business, at least not in this century. Legal battles aside, the $100 billion investment pledge will prove crucial to get the ball rolling and so far, it is not obvious who will foot the bill. #CHEVRON #VENEZUELA #OIL About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

So, you’ve learned the indicators, marked a textbook-perfect entry and still got stopped out the moment an economic report hit the wires. Or perhaps you correctly predicted where interest rates were heading but had no idea where to enter the trade without chasing the price. It is a frustrating position because both forms of analysis can appear convincing, right up until one exposes what the other has missed. This guide once and for all settles the technical analysis vs fundamental analysis debate by explaining how the two approaches differ, which should take the lead for your trading style and how to use them together. The aim is not to declare one the winner, but to give each method a clear job. Technical analysis studies price charts to identify potential entry and exit levels, while fundamental analysis examines economic data and monetary policy to judge whether a currency may strengthen or weaken. Short-term trading generally leans more heavily on technical analysis and longer-term trading on fundamentals, but a practical combined approach is to use fundamentals for direction and technicals for entry. Ready to put both methods to work on a live chart? Technical analysis answers where to enter and exit, while fundamental analysis helps determine whether to be long or short. Technical traders work primarily from the price chart. They study trends, support and resistance, momentum, chart patterns and indicators to identify where price may react and whether a trade offers a sensible entry, stop-loss and profit target. Read more：What is a stop-loss order and how to set it Fundamental traders look beyond the chart at the economic forces affecting a currency. They assess interest rates, inflation, employment, economic growth and central bank policy to decide whether one currency has a stronger outlook than another. In my experience, more established traders rarely waste much energy choosing a permanent side in this debate. They divide the labour instead: fundamentals provide the directional bias, while technical analysis helps turn that opinion into a properly timed trade. Fundamental analysis is the process of studying economic data and the interest-rate environment to judge whether a currency should strengthen or weaken. It considers the underlying forces that create demand for one currency relative to another. In practical terms, fundamental analysis answers the long-or-short direction question. A trader may conclude that a currency is likely to strengthen because its central bank is expected to keep interest rates higher, inflation remains persistent or economic growth is outperforming that of another country. Fundamentals can provide a useful directional bias, but they do not necessarily tell you the best price at which to enter. For a more detailed explanation, see our full fundamental analysis guide. Read more：Forex Fundamental Analysis: Meaning, Data and Trade Setups The main tools used for fundamental analysis include: These tools form the basic fundamental toolkit, while our main fundamental analysis article explains how to interpret them in greater depth. “The information is already priced in by the time the data is released.” This can be true when an announcement matches market expectations, but a meaningful surprise or change in the future policy outlook can still force traders to reprice a currency quickly. “Getting the direction right still gives me no entry level.” This is a fair criticism because fundamental analysis can identify a strong currency without showing where to buy it; this is precisely where technical analysis earns its place. “Fundamental analysis is barely usable on short timeframes.” It is often too slow and broad to generate precise entries on a one-minute or five-minute chart, but high-impact data and central bank comments can still overwhelm every technical signal on those charts. Fundamental analysis is therefore most useful for establishing direction and understanding market drivers, rather than choosing an exact entry price. Technical analysis is the process of reading the price chart and using historical price behaviour to identify possible entry and exit levels. Rather than asking why a currency is moving, it focuses on what price is doing and how traders are responding. In practical terms, technical analysis answers the when-and-at-what-price execution question. It helps traders locate trends, areas where buying or selling pressure previously appeared and levels that would prove a trade idea wrong. Technical analysis does not predict the future with certainty, despite what an especially enthusiastic indicator salesperson might suggest. Its purpose is to organise price information and create repeatable trading decisions with defined risk. Our full technical analysis guide explores the approach in greater detail. Read more：Forex Technical Analysis: A Step-by-Step Beginner's Guide The main tools used in technical analysis include: Indicators and patterns can become detailed subjects in their own right. Our dedicated indicator and chart-pattern guides explain how to use these tools without turning the chart into a collection of flashing lights. Read more：The best forex indicators every trader should use in 2026 “Two traders can reach opposite conclusions from the same chart.” This is a fair objection when rules are vague or levels are drawn to support an existing opinion, but a defined method with objective entry and invalidation criteria reduces that subjectivity. “Technical signals only work because other traders believe in them.” Widely watched levels can become self-reinforcing when many orders gather around them, but that does not make every pattern reliable; the level still needs context, liquidity and sensible risk management. “Beautiful backtests often fail in live trading.” They certainly can when a strategy has been overfitted to historical data or ignores spreads, slippage and changing market conditions, whereas testing across different periods and then trading it forward offers a more realistic verdict. Technical analysis is most useful when it creates a consistent execution framework, not when every line on the chart is treated as a prediction. The approach that really works for you depends largely on how long you intend to hold a position. A scalper lives almost entirely on the chart. Short-term price action, momentum and immediate liquidity matter far more than a long-term view of inflation or interest rates. Even so, a sensible scalper still checks the economic calendar because opening a trade seconds before an interest-rate decision is less technical analysis and more an unusually expensive coin toss. At the opposite extreme, a position trader may build an idea around central bank policy, growth expectations and widening interest-rate differences. That fundamental view can remain valid for weeks or months, but entering at a major resistance level, or placing a stop inside ordinary daily price movement, can still turn a sound idea into a losing trade. Swing traders and many day traders tend to operate between these two extremes. They need enough fundamental awareness to understand the likely direction and enough technical skill to enter without paying any price the market happens to be offering. This table is a starting point rather than a rigid rule. Most traders eventually find themselves somewhere in the middle, requiring a working understanding of both approaches. Combining fundamental and technical analysis works best when each method has a clearly defined responsibility. The principles below establish that division, while the following section turns them into a practical step-by-step trading process. Fundamentals should determine the preferred direction, while technical analysis should control the entry, stop-loss and profit target. Each approach answers a different question, and trouble usually begins when a trader asks a chart pattern to overrule a major economic shift, or expects an inflation report to provide a precise entry price. Decide in advance what you will do when the chart signal conflicts with the fundamental bias. You might ignore the trade, reduce the position size or wait for the technical picture to realign, but the rule must exist before money is at risk; hesitation in a live market often leads to missed opportunities or improvised trades. Avoid opening new positions immediately before or after high-impact economic releases. Spreads can widen, prices may jump and slippage can turn a carefully marked level into little more than a hopeful line on the chart, so it is usually better to wait for the initial volatility to settle. The timeframe of the technical signal should match the period covered by the fundamental view. A directional bias based on several months of central bank policy should not be abandoned because a one-minute chart produces a brief signal in the opposite direction; mismatched timeframes simply set your left hand against your right. Do not use a technical level as an excuse to catch a rapidly falling currency when the market is still repricing its economic outlook. Support and resistance can slow a move, but no structural level is guaranteed to hold against a powerful change in interest-rate expectations or central bank policy. For this reason, technical analysis should help you participate in a fundamental view at a sensible price, not persuade you to stand directly in front of it. The clearest way to understand technical and fundamental analysis is to follow one trade from the initial idea to the final risk calculation. In this example, the fundamental picture establishes the direction, while the chart decides whether the trade is worth taking and at what price. Running scenario: A trader is considering a short position in GBP/USD ahead of a UK inflation release. The trading account contains £8,000, and the trader will risk no more than 1.5% on the position. Begin by checking the economic calendar for events capable of materially changing the outlook for either currency in the pair. The key event in this scenario is the monthly UK Consumer Prices Index release, scheduled for Wednesday at 07:00 London time. The next task is to compare three pieces of information: An economic result matters because of how it changes expectations, not simply because the number is higher or lower than last time. For example, stronger inflation might support a currency if it makes an interest-rate cut less likely. However, the same result could have little effect if traders already expected it or if the central bank has made clear that it is focusing on weaker employment instead. In this scenario, the expected outcome should make the pound relatively weaker than the US dollar. The trader therefore establishes a bearish bias on GBP/USD. That bias narrows the trader’s attention to opportunities in one direction. It is not an entry signal, and no position should be opened simply because the economic argument sounds persuasive. With the directional bias established, technical analysis maps the battlefield. The trader opens the higher-timeframe chart, such as the daily or four-hour timeframe, and checks whether the broader price structure supports the fundamental view. The chart shows: The invalidation level is especially important. It marks the price at which the technical reason for taking the trade would no longer be valid, not merely the largest loss the trader feels emotionally able to tolerate. For a long trade, the entry zone might sit near support following a pullback, with invalidation below the most relevant swing low. For a short trade, it may sit near resistance, with invalidation above the corresponding swing high. If the chart structure clearly opposes the fundamental bias, the trader does not force an entry. The sensible choices are to wait for price structure to realign or reject the trade altogether. The entry is taken only when price reaches the marked technical zone and continues to support the fundamental direction. This is the point where the two forms of analysis finally meet. The trader’s entry rule is: Enter short only if GBP/USD reaches the 1.2705–1.2745 entry zone and produces a one-hour rejection candle closing back below 1.2720 in the same direction as the fundamental bias. Confirmation might be a rejection from support or resistance, a break and retest, or a candle closing back in the intended direction. Whatever rule is selected, it should be defined before price arrives rather than invented afterwards to justify an impulsive trade. Order discipline is particularly important around the scheduled announcement: If price moves away without returning to the level, the trader lets it go. Missing one trade costs nothing; chasing it at a poor price can cost considerably more. Once the entry is confirmed, the stop-loss goes at the technical invalidation level, and the profit target goes at the next meaningful structural level. Position size is then calculated backwards from the permitted account risk. The completed trade plan is: The maximum amount at risk is: Account balance × risk percentage = cash risk £8,000 × 1.5% = £120 This is the most the trader intends to lose if the stop is filled at the requested price. Slippage can still increase the actual loss during fast or illiquid conditions. For most currency pairs, one pip is 0.0001. For pairs involving the Japanese yen, it is normally 0.01. Entry-to-stop price difference ÷ pip size = stop distance |1.2733 − 1.2779| ÷ 0.0001 = 46 pips The amount that may be risked on each pip is: Cash risk ÷ stop distance = permitted value per pip £120 ÷ 46 pips = £2.61 per pip Use the broker’s current pip value for the selected pair and account currency: Permitted value per pip ÷ pip value per standard lot = position size £2.61 ÷ £7.85 = 0.33 standard lots The result should be rounded down if the platform does not accept the precise position size. Rounding up would push the potential loss beyond the planned limit. The distance from entry to target is: |1.2618 − 1.2733| ÷ 0.0001 = 115 pips The estimated profit if the target is reached is: Reward distance × permitted value per pip = potential profit 115 pips × £2.61 = £300.15 The final risk-reward ratio is: Reward distance ÷ stop distance = risk-reward ratio 115 pips ÷ 46 pips = 2.5:1 The completed trade therefore risks approximately £120 to pursue a potential return of around £300, producing a risk-reward ratio of 2.5:1. At this point, both forms of analysis have completed their assigned jobs. Fundamentals supplied the directional bias, technical analysis supplied the entry and invalidation levels, and risk management determined the position size. Neither technical nor fundamental analysis removes uncertainty. Problems arise when a trader relies on one method to perform a job it was never designed to do or combines both without deciding which one takes priority. The common problem is not choosing the wrong school of analysis. It is giving neither school a clearly defined job. The basic framework is the same, but stock fundamentals focus heavily on company earnings, revenue and financial health, whereas forex fundamentals centre on interest rates, inflation and national economic data. Forex also trades almost continuously during the working week, so technical levels can form and be tested across several global sessions. Many institutional and experienced forex traders use both: fundamentals help determine direction, market conviction and sometimes position size, while technical analysis controls execution. Traders relying almost entirely on charts tend to operate at the very short-term end of the market. Yes, many short-term traders make decisions almost entirely from price charts. Even so, they normally check the economic calendar and avoid high-impact release windows because one badly slipped trade can erase the profit from several successful ones. Warren Buffett uses fundamental analysis and value investing; he has recalled studying technical analysis and charting stocks when he was younger, but ultimately moved away from it. He represents the far-right side of our decision table: the lesson for forex traders is not that technical analysis is useless, but that the intended holding period determines which approach should lead. Technical analysis is not outdated, although its role has evolved. Classic chart patterns remain subjective, but price action, momentum and liquidity levels are still used by discretionary traders and algorithms to manage risk and locate short-term forex opportunities. A forex trader might look for EUR/USD to remain above its 50-day moving average while the RSI recovers from below 30, suggesting that a temporary pullback within a broader uptrend may be losing momentum. This combination could support a potential buy setup, although neither indicator guarantees the outcome; our full RSI guide explains the indicator in greater depth. Technical and fundamental analysis are not rival systems competing for a single place in your trading plan. Fundamentals supply the likely direction, technicals identify a sensible location, and your holding period determines which approach should take the lead. Before your next trade, check the economic calendar, write down your directional bias and mark the entry, invalidation and target levels on the chart. If those elements do not align, leave the trade alone and wait for one that does. Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Related concepts: