Methods of FOREX analysis
To start working at FOREX you have to understand what moves the market and what are the essential factors affecting the currencies quotes for any of them can cause the market rapid change.
The prices moves imply the possibilities of rapid profiting and the same rapid losing. So, the right market movement forecasting, evaluation of situations and rumors and expectations manipulating are the key factors of brokers’ and dealers’ success. Lots of factors affect the currency exchange as a whole and certain currency.
You can analyze the market by 2 methods – fundamental and technical. First implies the situations evaluation based on politics, economy and financial and credit policies. The second is based on charts and mathematical analysis.
Fundamental analysis
The fundamental factors are the basic macroeconomics indicators of national economies that affect the currency exchange participants and levels of currency rates. Knowing the dates and times of economic publications you can easily get them via Internet.
For currency exchange fundamental analysis as for any stock or goods market analysis people use the special analytical overviews and charts and tables of value indicators.
Fundamental factors affecting currency rates:
Economy growth indicators
Trade balance state and level of external sources dependence
Growth of monetary volume at internal market
Inflation level and expectations
Interest rates levels
The country’s pay ability and level of trust to national currency at world market
Currency exchange speculations
The level of development of other world financial market sectors (e.g. secured loans) competing with currency exchange
It’s hard to do the fundamental analysis for the same factors in different cases may unequally affect the market or turn into insufficient one from essential. So, the trader’s success basically depends on knowledge and understanding the financial markets rules and ability to correlate even the insufficient situations.
Technical analysis
The majority of small and mid-level financial markets players use technical analysis.
The basic tools of this analysis are the charts of currencies price changes at specific time periods preceding the deals and technical indicators obtained by mathematical processing of mean and other price movements characteristics. The technical analysis tools are universal and may be used with any financial markets tools, any currencies and any time periods. They may be used by all FOREX players regardless of their trading plans, strategies and deals durations. Presently, the technical analysis is performed with computer which is important as tools for technical analysis become more and more complicated.
Basically, the technical analysis is a statistics and mathematics analysis of preceding quotes with further prices forecasting.
Regardless to differences in approaches the fundamental and technical analysis are the mutually supplementing systems. Those acting based on fundamental analysis still have to take into account the certain market technical characteristics (the basic levels of support and resistance and overbuying and overselling levels) and those who use the technical analysis evaluate the latest news (interest rates and important political events).
The choice of a foreign currency trading service is not an easy task. And one shouldn’t dash to make a decision on such a service.
It is very important that you follow some general tips – today the online technologies give you a truly unique chance to choose exactly what you want for the best price on the market. Funny, but most of the people don’t use this opportunity. In real life it means that you should use all the tools of today to get any foreign currency trading information that you need.
Search Google and other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and participate in the online discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a smart and nicely balanced decision.
And also sign up to the RSS on this blog, because we will everything possible to keep updating this blog with new publications about the topic of foreign currency trading for dummies and important trends on the currency exchange market.
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