Two methods of FX market analysis stand tall:
1. Fundamental analysis concerns itself with analyzing socio-political and economic forces and evidencing their effects on the market.
2. When the analysis is conducted especially on the use of charts and graphs to study price movements and to analyze trends, this is called TECHNICAL ANALYSIS.
So which is the more suitable method? If you check out forums and websites you will chance upon many traders resolutely supporting one or the other. Those who like to lean on charts will tell you that the only way to make money with foreign exchange trading is to classify trends and jump onto them as fast as possible.
On the other hand, the fundamental analysts will allege that currency prices are moved by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere events that have no real relevance on reality.
This nonetheless, is not a foregone resolution. While the vast impression on the forex market, of variations in the economic and politcal fields, cannot be denied, patterns or trends could possibly be ascertained from price movements specially in the wake of announcements or during periods with no big announcements.
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 abruptly announced. You were not giving regard to the financial news and left a trade open at the wrong moment. That can result in debacle.
In the end, it is an irrefutable fact that economic attributes are behind most, if not all of the extreme price movements but it cannot be disbelieved that there are trends that can be predicted by technical analysis for the shorter periods. So identifying these trends while being aware and up to date on current events is the most definitive way to envisage direction of future currency prices. Close prediction is of course how one makes a profit on the foreign exchange market.
Forex market movements are a bit like elastic that can stretch in one way or another and then fall back, although not always to its beginning position. The fundamentals are the factors that cause it to stretch. Technical analysis foresees how far it will fare in each direction before reversing.
So when you want to profit from foreign exchange trading it is better not to let your thought to become fixed on either one. You should learn to balance the use of both methods of foreign exchange market analysis to make constant profits. - 22871
1. Fundamental analysis concerns itself with analyzing socio-political and economic forces and evidencing their effects on the market.
2. When the analysis is conducted especially on the use of charts and graphs to study price movements and to analyze trends, this is called TECHNICAL ANALYSIS.
So which is the more suitable method? If you check out forums and websites you will chance upon many traders resolutely supporting one or the other. Those who like to lean on charts will tell you that the only way to make money with foreign exchange trading is to classify trends and jump onto them as fast as possible.
On the other hand, the fundamental analysts will allege that currency prices are moved by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere events that have no real relevance on reality.
This nonetheless, is not a foregone resolution. While the vast impression on the forex market, of variations in the economic and politcal fields, cannot be denied, patterns or trends could possibly be ascertained from price movements specially in the wake of announcements or during periods with no big announcements.
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 abruptly announced. You were not giving regard to the financial news and left a trade open at the wrong moment. That can result in debacle.
In the end, it is an irrefutable fact that economic attributes are behind most, if not all of the extreme price movements but it cannot be disbelieved that there are trends that can be predicted by technical analysis for the shorter periods. So identifying these trends while being aware and up to date on current events is the most definitive way to envisage direction of future currency prices. Close prediction is of course how one makes a profit on the foreign exchange market.
Forex market movements are a bit like elastic that can stretch in one way or another and then fall back, although not always to its beginning position. The fundamentals are the factors that cause it to stretch. Technical analysis foresees how far it will fare in each direction before reversing.
So when you want to profit from foreign exchange trading it is better not to let your thought to become fixed on either one. You should learn to balance the use of both methods of foreign exchange market analysis to make constant profits. - 22871
About the Author:
Forex trading is like the forex stock market. Forex markets move quickly, get forex trading training to keep on top of it.
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