Types Of Analysis In Forex

As a Ninja during your training, it is important to know when, where and against whom to fight, as well as how to do it. But the most important thing is to know when not to fight!

There used to be several ways to trade the Forex market. Each person is different and each of us must find a style to adapt to.

One must rely mainly on Fundamental Analysis and Technical Analysis. These are the 2 main ways to analyze the Forex market, which will help us determine what is likely to happen.

Fundamental analysis

Fundamental types of analysis in forex is a way to see what is happening with the currency from an economic point of view, mainly.

As mentioned above, economic news is normally published at pre-scheduled times, as shown in the Forex Calendar. This news often drives the price down.

Forex market analysis fundamentalists primarily use this economic data to try to predict the forex market in which currency will appreciate and which currency will depreciate in value.

fundamental analysis

In simple terms, which currency is going to get stronger and which currency is going to get weaker.

For example, currencies tend to strengthen when interest rates rise. This is because that coin now attracts savers. These savers can be from anywhere in the world.

Technical operators

Technical Analysis is a way to see what is happening with the currency, purely by looking at past prices. Technical operators believe that the chart has all the necessary information. For this reason, Technical traders are also known as Chartists.

They determine where the price will move in the future by looking at how the chart behaved in the past.

These past movements can give indications of where the coin will jam; in the areas of support and resistance. It can also display patterns that will indicate market sentiment. You can see the graphics patterns later.

Fundamental analysis vs technical analysis

technical analysisIt happens not to be possible to say which of the two ways of operating is better. It is best to have knowledge of both approaches.

An understanding of both is necessary, because even if you are a Technical operator, a news item could have a significant impact on your operation.

Have you ever seen a chart and wondered why there was a gap or a huge price increase? Well this could be due to some news.

If you are a Technical trader (like most of the people on this site), then you have to learn how to attack by looking at the chart and measuring your market entry. But you also need to defend yourself against other threats, being aware of possible news that may affect your operations.

For this reason, many Technical traders will have the Forex Calendar page open, and if an important news is foreseen they will wait for a certain period, to, after the news, return to trading.

They do this because news can cause unpredictable results, especially when it has just been announced. To protect yourself against losses, you need to know both methods of trading Forex.