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.
You may wonder which approach of market analysis to take. It is really up to your personality. There are many traders who trade only using technical indicators and think that making decisions based on fundamental factors is not profitable. However there are other traders who may think the opposite way.
Fundamental traders will show you how economic news cause the high volatility of the price. On the other hand technical traders would show you the indicator patterns that give the buy or sell trading signals. And both of them will be right.
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 learn trading Forex.
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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