Determining the Better Type of Forex Analysis
Two forms of foreign exchange market analysis are there:
1. Fundamental analysis takes into account economic, social and political elementsand how they sway the money markets.
2. Technical analysis engages charts to pinpoint trends and patterns in the change of prices.
So which is the superior analysis? If you check out forums and websites you will see many traders resolutely supporting one or the other. Those who like to depends on charts will tell you that the only way to make money with currency trading is to find out trends and jump onto them as soon as possible.
On the other hand the supporters of fundamental analysis will defend that it is the economic factors that drive the changes in currency prices and this is unquestionably true, at least most of the time. From that spot they will defend that any patterns you would find on a chart are nothing more than coincidental.
This though, is not a foregone conviction. 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 identified from price movements especially in the wake of announcements or during periods with no consequential announcements.
But if you place all your conviction in technical analysis, quick announcements in crucial financial news will perhaps catch you off guard. Since you would be dependant on charts and not news, you may end up picking the unfavorable time to trade. Such an occasion could be calamitous.
So the crux is that there are economic happenings behind the larger scale rises and falls in the market, but there are also casual patterns that can be recognized in the short term. Discovering these patterns and trends, while keeping one eye on the economic and political news, is the best approach to predict future price movements. And predicting future price movements, obviously, is the way to make money with foreign exchange trading.
If we correlate the forex market to an elastic object, it can move in either direction and at times, return to the original position. Fundamentals stir the market. The extent of the movement and its return point is estimated by technical analysis.
So when you want to profit from foreign exchange trading it is better not to let your concentration to become fixed on either one. You ought to learn to balance the use of both forms of foreign exchange market analysis to make constant profits. - 23223
1. Fundamental analysis takes into account economic, social and political elementsand how they sway the money markets.
2. Technical analysis engages charts to pinpoint trends and patterns in the change of prices.
So which is the superior analysis? If you check out forums and websites you will see many traders resolutely supporting one or the other. Those who like to depends on charts will tell you that the only way to make money with currency trading is to find out trends and jump onto them as soon as possible.
On the other hand the supporters of fundamental analysis will defend that it is the economic factors that drive the changes in currency prices and this is unquestionably true, at least most of the time. From that spot they will defend that any patterns you would find on a chart are nothing more than coincidental.
This though, is not a foregone conviction. 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 identified from price movements especially in the wake of announcements or during periods with no consequential announcements.
But if you place all your conviction in technical analysis, quick announcements in crucial financial news will perhaps catch you off guard. Since you would be dependant on charts and not news, you may end up picking the unfavorable time to trade. Such an occasion could be calamitous.
So the crux is that there are economic happenings behind the larger scale rises and falls in the market, but there are also casual patterns that can be recognized in the short term. Discovering these patterns and trends, while keeping one eye on the economic and political news, is the best approach to predict future price movements. And predicting future price movements, obviously, is the way to make money with foreign exchange trading.
If we correlate the forex market to an elastic object, it can move in either direction and at times, return to the original position. Fundamentals stir the market. The extent of the movement and its return point is estimated by technical analysis.
So when you want to profit from foreign exchange trading it is better not to let your concentration to become fixed on either one. You ought to learn to balance the use of both forms of foreign exchange market analysis to make constant profits. - 23223
About the Author:
Learn how to manage forex analysis when trading forex. Find out about forex trading software to be fully informed with your forex trading.
posted by X - Men @ 3:40 AM
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