Determining the Better Form of Forex Analysis
Two kinds of forex market analysis prevail:
1. Fundamental analysis concerns itself with scrutinizing socio-political and economic forces and defining their outcome on the market.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
Choosing one over the other is not spontaneous. A cursory erxamination of foreign exchange trading related forums and websites show traders being staunch advocates of either one of these approaches. Those who choose technical analysis assert that graphs are the only 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 allege that currency prices are actuated by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere eventualities that have no real relevance on reality.
This nonetheless, is not a foregone judgement. While the vast significance on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be identified 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 signifcant 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.
In the end, it is an undeniable fact that economic attributes are behind most, if not all of the extreme price movements but it cannot be declined that there are trends that can be predicted by technical analysis for the shorter periods. So picking up these trends while being aware and up to date on current events is the most definitive way to envisage direction of future currency market values. Concrete prediction is of course how one makes a profit on the FX market.
If we relate the forex market to an elastic object, it can go in either direction and occasionally, return to the original spot. Fundamentals stir the market. The extent of the movement and its return point is anticipated by technical analysis.
So when you want to profit from foreign exchange trading it is better not to admit your concentration to become fixed on either one. You ought to learn to balance the use of both forms of FX market analysis to make steady profits. - 23196
1. Fundamental analysis concerns itself with scrutinizing socio-political and economic forces and defining their outcome on the market.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
Choosing one over the other is not spontaneous. A cursory erxamination of foreign exchange trading related forums and websites show traders being staunch advocates of either one of these approaches. Those who choose technical analysis assert that graphs are the only 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 allege that currency prices are actuated by socio-economic factors, a fact that cannot be renounced. Thus according to them, chart patterns are mere eventualities that have no real relevance on reality.
This nonetheless, is not a foregone judgement. While the vast significance on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be identified 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 signifcant 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.
In the end, it is an undeniable fact that economic attributes are behind most, if not all of the extreme price movements but it cannot be declined that there are trends that can be predicted by technical analysis for the shorter periods. So picking up these trends while being aware and up to date on current events is the most definitive way to envisage direction of future currency market values. Concrete prediction is of course how one makes a profit on the FX market.
If we relate the forex market to an elastic object, it can go in either direction and occasionally, return to the original spot. Fundamentals stir the market. The extent of the movement and its return point is anticipated by technical analysis.
So when you want to profit from foreign exchange trading it is better not to admit your concentration to become fixed on either one. You ought to learn to balance the use of both forms of FX market analysis to make steady profits. - 23196
About the Author:
Forex trading requires knowledge of the forex pip. Forex markets move quickly, get forex trading training to keep on top of it.
posted by X - Men @ 6:21 AM
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