There are so many ways of analyzing the forex market while trading but it is imperative to note that none is "holy grail" that will make one rich overnight or a get rich quick scheme, Forex trading is a business and only when treated as such can one make profit from forex trading.
TYPES OF FOREX ANALYSIS
There are different analytic techniques used in forex trading, although none is flawless but some makes forex trading easier and increases the chances to succeed to a very high scale and discovering, studying, understanding and applying the right analytic techniques could give the trader such benefits, These are the various types of forex analysis.
Fundamental analysis deals with the study of a countries general economy such as Gross domestic product (GDP), unemployment rate, interest rate and other economics parameters. This analytic technique requires constant information from the newspaper and other news platforms.
The major problem with this technique is that information delivery is normally slow, and most times by the time the announcement is made the currency in question price might have moved the opposite direction base on the news factor.
Forex expert advisor review is a program designed to help traders perform automatic or mechanical forex tasks without the direct involvement of the trader, this is why it is known as EA or mechanical trading system (MTS) as it directly sends applications to the broker, without the technical involvement of the trader. It works systematically in a way that the trader installs and connects it to the server broker and the MTS starts trading according to a strategy due to an adjusted setting.
THE BENEFITS OF FOREX EA
Forex EA has the ability to keep a 24 hours trading system, responding to opportunities and monitor currencies fluctuations based on the users settings, thereby making life easier, saving cost and time and giving beginners the ability to trade and make profits without an in-depth knowledge of technical and fundamental analysis and also in the trader's absent.
THE DISADVANTAGE OF FOREX EXPERT ADVISOR
The major problem with forex EA is that the market is changing constantly and a Forex EA that is effective today might not be tomorrow base on the changes in the market.
They are 4 common indicators which are: moving average convergence divergence MACD, relative strength index RSI, and moving average, they use some signals to indicate when to trade and when not to trade.
Technical analysis determines the direction of the currency through the past price of a currency with the believe that history tend to repeat itself,
Technical analysis makes the assumption that the price 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.
Although Forex analysis techniques makes Forex trading easier and more efficient it still don't cancel critical evaluation of the trader, and it is imperative to make such evaluation before choosing an analysis technique.
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.