Types of forex analysis
Forex analysis is the most important thing to learn if you want to be successful in foreign currency trading. This is the only way to effectively determine the currency to buy or sell. There are two main methods used to break the currency market data. Basically, you can use technical or fundamental analysis of foreigners when entering or leaving the market.
- Technical analysis
Here, a trader generally relies on the past performance of the currencies negotiated when developing a strategy. Technical analysis makes extensive use of charts and other trend tools. Here, your main concern is to monitor the prices of the currencies that interest you. By looking at 12the prices of past currencies, you can identify the direction of the currencies and adapt your strategy accordingly.
- Fundamental forex analysis
Here, you try to take a look at the big picture. This type of analysis obliges the trader to study the national economic indicators of the countries that issue the currencies exchanged. Here it is necessary to take into account data such as unemployment rate, market interest rates and gross domestic product, among other statistical facts. Fundamental analysis also involves observing important news that affects not only the countries concerned, but also the global economy in general. The philosophy behind this type of analysis is that the overall economic performance of the countries in question can significantly affect currency prices.
In conclusion, neither of these two forex analysis can produce 100% positive result. Seasoned traders often combine technical and fundamental analysis when formulating their overall trading strategy. In addition, it should be noted that the time you plan to be on the market and the amount of information you have can influence your choice of analysis method. For example, if you practice short-term trading, it may not be important to study national interest rates and unemployment trends.