by forexauthor on June 29, 2009 · Filed Under: Forex
Tags: forex market analysis
As you may know currency market as any other market is analyzed by looking at charts and technical indicators as well as looking at the overall economic picture. The first way called technical analysis and the second one is fundamental analysis.Below are my thoughts and my Forex trading tips.
The question arises: which way of analyzing the market should you take? There is no right or wrong answer to this question. You probably already met traders who make money consistently in Forex. They would defend their own approach and think that the other one is for losers.
Forex traders who use the technical analysis will argue that only chart patterns and indicators will give you the reliable signals by showing you the charts. However those traders who use fundamental analysis can show you how the economic news releases move the price. By knowing the certain fundamental parameters you can predict which way the price will go.
Some people looking at the volatility caused by the economic news releases may think that it’s the most reliable approach to trade in Forex. However the technical analysis patterns are also very reliable if you know how to recognize them. Technical analysis is very valuable when there is no economic news around to make a huge impact on the market.
That’s why you don’t have to rely only on one type of market analysis. If you use only technical analysis any significant economic news release will destroy your analysis and chart patterns. That may lead you to sustain a big loss.That’s the reason why you need to educate yourself to trade currencies.
Fundamental news releases not only move the currency pair for very short period of time, very often that strong movement will set the price movement direction for much longer time. Therefore following the local and worldwide economic and political news is the way to predict the currency price movement. However the technical analysis give you the exact points to take profitable trades.
Price movement is never a straight line. Price will go up and down. It’s true that economic factors are behind those movements. But technical analysis can also predict how long the movement of the price due to a fundamental news can last and pinpoint the exact entry and exit points.
That’s the reason why most successful traders pay attention to technical analysis as well as to fundamental one. It is always best to have a balanced approach. Nowadays a lot more traders use only technical analysis. If you one of them at least know the schedule of the major news releases to adjust your trades properly.
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by forexauthor on June 29, 2009 · Filed Under: Forex
Tags: forex market analysis
As you may know currency market as any other market is analyzed by looking at charts and technical indicators as well as looking at the overall economic picture. The first way called technical analysis and the second one is fundamental analysis.Below are my thoughts and my currency trading tips.
The question arises: which way of analyzing the market should you take? There is no right or wrong answer to this question. You probably already met traders who make money consistently in Forex. They would defend their own approach and think that the other one is for losers.
For example those traders who use economic news would tell you that only the fundamental factors move the price of the currency. On the other hand technical traders would argue that the chart patterns repeat themselves signaling about the direction of the price movement.
Some people looking at the volatility caused by the economic news releases may think that it’s the most reliable approach to trade in Forex. However the technical analysis patterns are also very reliable if you know how to recognize them. Technical analysis is very valuable when there is no economic news around to make a huge impact on the market.
If you use only technical analysis by identifying the technical patterns and not paying attention to the fundamental factors, then any major economic event can move a currency pair against your position. There are indeed some regular economic news releases that can move a currency pair up to 100 pips in a matter of few seconds.That’s the reason why you need to learn Forex trading.
Following the worldwide economy and politics can help you to predict the price of the currency pair. The fundamental news releases not only move the price of the pair in a short term but they can set up the direction of the movement for the longer period of time. And during that period technical pattern recognition will help you identify profitable trades.
Price in Forex market always moves up and down. Fundamental traders are right it is the economic factors behind the big movements. But it is the technical analysis that can estimate how long the momentum of the movement set by an economic news can last. It can give you the exact levels to place your orders.
That’s the reason why most successful traders pay attention to technical analysis as well as to fundamental one. It is always best to have a balanced approach. Nowadays a lot more traders use only technical analysis. If you one of them at least know the schedule of the major news releases to adjust your trades properly.
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