Determining the Better Form of Foreign Exchange Analysis
The analysis of the Forex market can be classified into two types:
1. The method of analysis that concerns itself with assaying the nature and the results of socio-economic and political undercurrents on the foreign exchange market is called FUNDAMENTAL ANALYSIS.
2. Technical analysis however , employs graphs and charts to surmise patterns that manifest price movement.
Choosing one over the other is not spontaneous. A cursory surveying of currency trading related forums and websites show traders being zealous advocates of either one of these styles. Those who choose technical analysis assert that graphs are the solitary technique that can predict way ahead of time the trends which is important to making a profit in trading.
However, those who consider fundamental analysis will contend that the exclusive drivers of the market prices are socio-political and economic aspects, a fact that has been proven time and again in most of the movements. They break down that any relationship between the charts and real time movements are completely by chance.
This though, is not a foregone conviction. While the vast impression on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be gathered from price movements expressly in the wake of announcements or during periods with no consequential announcements.
One warning for the technical analysis idealists is that there is a possibility that they will be caught unprepared should interest rates suddenly change. If the person does not read the news then there is a big probability that they will make a bad trading call. This can end up in a major problem.
In the end, it is an absolute fact that economic aspects are behind most, if not all of the extreme price movements but it cannot be renounced 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 definite way to envisage direction of future currency prices. Precise prediction is of course how one makes a profit on the foreign exchange market.
Markets are sometimes characterized in terms of elasticity as they can move in either direction and fall back to their starting or another position. The attributes that stretch the market are the fundamentals of socio-political and economic forces. How much it will stretch and where and when it will stay is the area of technical analysis.
Hence you would be well advised not to be a loyalist in either form of analysis. Sizable returns are realized better when fundamental and technical analysis are combined together. - 23310
1. The method of analysis that concerns itself with assaying the nature and the results of socio-economic and political undercurrents on the foreign exchange market is called FUNDAMENTAL ANALYSIS.
2. Technical analysis however , employs graphs and charts to surmise patterns that manifest price movement.
Choosing one over the other is not spontaneous. A cursory surveying of currency trading related forums and websites show traders being zealous advocates of either one of these styles. Those who choose technical analysis assert that graphs are the solitary technique that can predict way ahead of time the trends which is important to making a profit in trading.
However, those who consider fundamental analysis will contend that the exclusive drivers of the market prices are socio-political and economic aspects, a fact that has been proven time and again in most of the movements. They break down that any relationship between the charts and real time movements are completely by chance.
This though, is not a foregone conviction. While the vast impression on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be gathered from price movements expressly in the wake of announcements or during periods with no consequential announcements.
One warning for the technical analysis idealists is that there is a possibility that they will be caught unprepared should interest rates suddenly change. If the person does not read the news then there is a big probability that they will make a bad trading call. This can end up in a major problem.
In the end, it is an absolute fact that economic aspects are behind most, if not all of the extreme price movements but it cannot be renounced 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 definite way to envisage direction of future currency prices. Precise prediction is of course how one makes a profit on the foreign exchange market.
Markets are sometimes characterized in terms of elasticity as they can move in either direction and fall back to their starting or another position. The attributes that stretch the market are the fundamentals of socio-political and economic forces. How much it will stretch and where and when it will stay is the area of technical analysis.
Hence you would be well advised not to be a loyalist in either form of analysis. Sizable returns are realized better when fundamental and technical analysis are combined together. - 23310
About the Author:
Forex trading requires understanding forex orders. To trade forex effectively you must understand forex trading strategy to stay abreast of it all.
posted by Mr. Forex at
6:30 AM
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