Forex Market Analysis: Which Type Is Better, And How To Apply It In Your System?
There are two kinds of forex market analysis: fundamental analysis, which takes into account economic, social and political forces and which way they influence the forex markets, and technical analysis which applies graphs to spot trends and formations in the movement of prices.
So which one is better? If you go to forums and websites you will find a lot of traders strongly argumenting for one or the other. Those who like to lean on on graphs will advise you that the only method to make profits with forex trading is to spot trends and jump onto them as early as possible.
On the other hand the advocates of fundamental analysis believe that it is the economic factors that drive the changes in forex trends and this is doubtlessly correct, at least most of the time. From that position they will reason that any formation you might find on a graph are nothing more than coincidental.
But logically this does not necessarily follow. Even though economic shifts have a enormous effect on the forex markets, it may still be possible to recognize patterns in the way that the markets move after an announcement or in times when there are no important announcements.
If on the other hand you rely purely on your graphs, you can possibly be caught out when an important market event such as an interest rate change is unexpectedly announced. If you were not watching the financial news and left a position open at the wrong side of the market, that could cause a catastrophe.
So the final conclusion is that there are economic events behind the larger scale rises and falls in the market, but there are also usual patterns that can be spotted in the short term. Finding these patterns and trends, while watching the economic and political news, is the right way to foretell future trend changes. And foreseeing future price movements, certainly, is the way to make profits with forex trading.
Forex market movements are a little like elastic that can expand in one way or another and then fall back, although not always to its starting position. The fundamentals are the forces that cause it to expand. Technical analysis forecasts how far it will go in each direction before turning around.
So when you want to profit from currency trading it is better not to allow your attention to become fixed on either one. You need to learn to balance the use of both kinds of forex market analysis to make consistent profits.
The best tool to find out whether an analysis is right or not is using forex trading signals. If you can find a good forex signal provider, whose accurate forex signals are in agreement with the analysis, then you can bet on what you read.
Forex Market Analysis: Which Type Is Better, And How To Apply It In Your System?
There are two types of forex market analysis: fundamental analysis, which considers economic, social and political forces and how they influence the currency markets, and technical analysis which uses charts to identify trends and patterns in the movement of prices.
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