Forex analytic tools are in simple words, the working implements of the forex trader, it is the first principles that a new trader is expected to imbibe if he is to make headway in forex. Forex analytical tools are many but in this article we will focus on just one of them so we can do justice to it. And it will be one of the most useful tools in forex.
In finance and business, technical analysis is a security analysis discipline for forecasting the trend direction of prices through the study of past market data, primarily price and volume. The core principles of technical analysis were gleaned from the observation of financial markets over the years. The oldest known practice of technical analysis appears in the accounts of the Dutch markets in the 17th century. In Asia, thought to be a method developed by Homma Munehisa during early 18th century which evolved into the use of candlestick techniques, which is today a main charting tool
While fundamental analysts appears only to look at earnings, dividends, new products, research and the like, technical analysts examine and studies what investors fear or think about those developments and whether or not investors have the wherewithal to back up their opinions. Technicians make use of some tools, one of which is the use of charts. The use of charts is essentially charts to identify price patterns and market trends in financial markets and attempt to exploit those patterns for profit making
CHARACTERISTICS OF TECHNICAL ANALYSIS
Technical analysis employs some scientific models and trading rules which are dependent on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles which are classically, the recognition of chart patterns. Technical analysis critically evaluates price, volume and other salient market information, meanwhile fundamental analysis considers the actual facts of the company such as market, currency, commodity etc. Most large brokerage, trading group, financial institution and individual traders use both a technical analysis and fundamental analysis.
The technical analysts well know the dynamics of how a market's price reflects all and not on the external drivers such as economic, fundamental and news events.
- MARKET ACTION DISCOUNTS EVERYTHING
Established on the premise that all important information is already reflected by prices, technical analysts believe it is important to understand what investors think of that information, known and perceived.
- HISTORY TENDS TO REPEAT ITSELF
From the observations of technical analysts, it was proven that investors from different times repeat the same mistakes. To a technician, the emotions in the market may not make sense, but they exist and are seen every day. Because these investors’ behavior repeats itself very often, recognizable (and predictable) price patterns do will develop on a chart. We must know that technical analysis is not limited only to charting, but will always consider price trends.
The industry has a global body called the International Federation of Technical Analysts (IFTA), which is made up of regional and national organizations and the Market Technicians Association (MTA). In the United States, the industry two bodies, both the Market Technicians Association (MTA) and the American Association of Professional Technical Analysts (AAPTA).
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