Foreign Exchange Analysis: Which Method Is Better?
The analysis of the Forex market can be categorized into two types:
1. The method of analysis that concerns itself with assaying the nature and the ramifications of socio-economic and political undercurrents on the foreign exchange market is called FUNDAMENTAL ANALYSIS.
2. When the analysis is concentrated especially on the use of charts and graphs to study price movements and to identify trends, this is called TECHNICAL ANALYSIS.
Choosing one over the other is not spontaneous. A cursory inspection of FX trading related forums and websites show traders being staunch advocates of either one of these methods. Those who admire technical analysis assert that graphs are the solitary technique that can predict way ahead of time the trends which is important to making a profit in trading.
On the other hand, the fundamental analysts will announce that currency prices are moved by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere eventualities that have no real consequence on reality.
But rationally this does not necessarily appear. Even though economic changes have a whopping effect on the currency markets, it may still be possible to determine patterns in the way that the markets react after a notification or in times when there are no major notificaitons.
If on the other hand you rely entirely on your charts, you are likely to be caught out when a preeminent financial event such as an interest rate change is quickly announced. You were not giving heed to the financial news and left a trade open at the wrong moment. That can result in catastrophe.
So the sum and substance is that there are economic occurences behind the larger scale rises and falls in the market, but there are also characteristic patterns that can be poinpointed in the short term. Discovering these patterns and trends, while keeping one eye on the economic and political news, is the best technique to predict future price movements. And predicting future price movements, undoubtedly, is the way to make money with foreign exchange trading.
If we compare the forex market to an elastic object, it can go in either direction and occasionally, return to the original position. Fundamentals alter the market. The extent of the movement and its return point is anticipated by technical analysis.
So when you want to profit from currency trading it is better not to let your thought to become fixed on either one. You should learn to balance the use of both kinds of currency market analysis to make regular profits. - 23204
1. The method of analysis that concerns itself with assaying the nature and the ramifications of socio-economic and political undercurrents on the foreign exchange market is called FUNDAMENTAL ANALYSIS.
2. When the analysis is concentrated especially on the use of charts and graphs to study price movements and to identify trends, this is called TECHNICAL ANALYSIS.
Choosing one over the other is not spontaneous. A cursory inspection of FX trading related forums and websites show traders being staunch advocates of either one of these methods. Those who admire technical analysis assert that graphs are the solitary technique that can predict way ahead of time the trends which is important to making a profit in trading.
On the other hand, the fundamental analysts will announce that currency prices are moved by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere eventualities that have no real consequence on reality.
But rationally this does not necessarily appear. Even though economic changes have a whopping effect on the currency markets, it may still be possible to determine patterns in the way that the markets react after a notification or in times when there are no major notificaitons.
If on the other hand you rely entirely on your charts, you are likely to be caught out when a preeminent financial event such as an interest rate change is quickly announced. You were not giving heed to the financial news and left a trade open at the wrong moment. That can result in catastrophe.
So the sum and substance is that there are economic occurences behind the larger scale rises and falls in the market, but there are also characteristic patterns that can be poinpointed in the short term. Discovering these patterns and trends, while keeping one eye on the economic and political news, is the best technique to predict future price movements. And predicting future price movements, undoubtedly, is the way to make money with foreign exchange trading.
If we compare the forex market to an elastic object, it can go in either direction and occasionally, return to the original position. Fundamentals alter the market. The extent of the movement and its return point is anticipated by technical analysis.
So when you want to profit from currency trading it is better not to let your thought to become fixed on either one. You should learn to balance the use of both kinds of currency market analysis to make regular profits. - 23204
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Learn how to manage forex quotes when trading forex. Find out about forex trading software to be fully informed with your forex trading.
posted by X - Men @ 10:54 AM
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