Forex trading analytics

Forex trading is the act of buying or selling a foreign currency with the objective to make gain, such transactions cannot be totally successful and yield gain without proper analysis. Forex trading analytics are the principles governing forex trading analysis; which is a critical study of the changes in the forex market which are used in the decision of whether or not to buy or sell a currency.

WHAT IS FOREX TRADING ANALYSIS?

Forex trading analysis is a critical study of the changes in the forex market which are used in the decision of whether or not to buy or sell a currency. Forex analysis can be either technical or fundamental in nature, which could be done either manually which requires a trader sitting in front of a computer analyzing signals and making decisions whether or not to buy or sell, or automatically which involves the use of software to identify and interpret certain installed signals.

TECHNICAL FOREX TRADING ANALYSIS

Technical analysis can be done either manually or automatically and it uses the past prize movement of a currency to determine the direction of the currency, with the belief that history tend to repeat itself. Technical trading system involves the following forms: use of chart, use of technical indicators and oscillators or a combination of two or more techniques.

TECHNICAL ANALYSIS IS ON THE BASIS OF THE FOLLOWING ASSUMPTIONS

  1. there is a discount on everything by the market

  2. prize regularly move in trends

  3. history tend to repeat itself

THERE IS A DISCOUNT ON EVERYTHING BY THE MARKET

Technical analysis assumes that the prize of a stock reflects everything that affects the market including it fundamental factors, broad market factors and market psychology this is known as Efficient Market Hypothesis.

PRIZE REGULARLY MOVE WITH TRENDS

Technical analysts believe that the prize of stock in the market move in short, medium and long term trend, that is they repeat a past trend rather than making a random move.

HISTORY TEND TO REPEAT ITSELF

In technical analysis there is an assumption that history tend to repeat itself, this repeat is usually believed to be on the bases of market psychology which are analyzed using chart patterns.

FUNDAMENTAL FOREX TRADING ANALYSIS

Fundamental analyst uses parameters like gross domestic products (GDP), unemployment rates, interest rates and other economic parameters from the country in particular to analyze the changes in the foreign market. It can be made up of the following aspects: the direct analysis of the economy, the analysis of the company. The following information can be used in the prediction of the future value of the stocks.

CONCLUSION

Forex analysis is imperative when trading on forex, and a number of different analytic techniques are available for traders, a successful trader depends on the choice of or combination of techniques, and as one choose it is important to know all analytical techniques are not flawless and one can still lose his/her capital so it is also imperative for one to study any analytical technique before choosing it.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Start Trading
Follow us in social networks!
Live Chat
Leave feedback