Determining the Superior Form of Forex Analysis
Fundamental and technical analysis are the two vital methods used in the foreign exchange market.
1. Fundamental analysis takes into account economic, social and political factorsand how they sway the money markets.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
So which is the more suitable analysis? If you check out forums and websites you will chance upon many traders heavily 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 fundamental analysts will allege that currency prices are moved by socio-economic factors, a fact that cannot be opposed. Thus according to them, chart patterns are mere events that have no real relevance on reality.
But reasonably this does not necessarily happen. Even though economic changes have a whopping effect on the currency markets, it may still be possible to determine patterns in the way that the markets react after a new information or in times when there are no major notificaitons.
One counsel for the technical analysis believers is that there is a chance that they will be caught unsuspecting 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 trouble.
So the sum and substance is that there are economic circumstances behind the larger scale rises and falls in the market, but there are also casual patterns that can be established in the short term. Identifying these patterns and trends, while keeping one eye on the economic and political news, is the best technique to predict future price movements. And predicting future price movements, definitely, is the way to make money with foreign exchange trading.
If we relate the forex market to an elastic object, it can move in either direction and periodically, return to the original position. Fundamentals alter the market. The extent of the movement and its return point is predicted by technical analysis.
Hence you would be well advised not to be a believer in either kind of analysis. Excellent returns are realized better when fundamental and technical analysis are utilized together. - 23211
1. Fundamental analysis takes into account economic, social and political factorsand how they sway the money markets.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
So which is the more suitable analysis? If you check out forums and websites you will chance upon many traders heavily 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 fundamental analysts will allege that currency prices are moved by socio-economic factors, a fact that cannot be opposed. Thus according to them, chart patterns are mere events that have no real relevance on reality.
But reasonably this does not necessarily happen. Even though economic changes have a whopping effect on the currency markets, it may still be possible to determine patterns in the way that the markets react after a new information or in times when there are no major notificaitons.
One counsel for the technical analysis believers is that there is a chance that they will be caught unsuspecting 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 trouble.
So the sum and substance is that there are economic circumstances behind the larger scale rises and falls in the market, but there are also casual patterns that can be established in the short term. Identifying these patterns and trends, while keeping one eye on the economic and political news, is the best technique to predict future price movements. And predicting future price movements, definitely, is the way to make money with foreign exchange trading.
If we relate the forex market to an elastic object, it can move in either direction and periodically, return to the original position. Fundamentals alter the market. The extent of the movement and its return point is predicted by technical analysis.
Hence you would be well advised not to be a believer in either kind of analysis. Excellent returns are realized better when fundamental and technical analysis are utilized together. - 23211
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posted by X - Men @ 1:55 AM
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