If you want exhaustive information about technical analysis, read this article.
Supporters of technical analysis create their prognosis, making a close study of charts over prior periods of time. If it is said, that the market moves up, it means three principal types of information: the rate of exchange evolution, total amount of transactions and number of positions which were not closed during trading session.
There are three main principles of technical analysis:
1) Market’s moves are all-inclusive.
It means that any factor, which has an effect on the rate of exchange (it can be economic, political or psychological), chart includes beforehand. That’s why studying of the line chart is a precondition to forecasting.
Price development.
Trend of prices is a direction of price development. The main task of technical analysis is a revelation of trends for using it in trade.
2) There are three types of trends:
1. Bullish – characterized by the rise in prices.
2. Bearish – characterized by the fall in prices.
3. Sideways, Flat – characterized by constant prices.
All theories and techniques of technical analysis are based on the trend’s moving in one direction, until it does not give a special signal about its turn.
3) History repeats itself.
Technical analysts say that it is because human psychology stays put from century to century. Inherently, technical analysis’s speciality is the history of some events connected with market, so, this is a study of human psychology. In other words, understanding of the future lies in studying of the past.
Every FOREX’s participant in every concrete transaction plays the role of currency’s seller or buyer. Seller wants to trade up, for example, he tries to fix a rate of GBP/USD at 1.6325, and buyer wants to trade down, for example, GBP/USD to 1.6322. According to this, offered rate of seller is called ASK, and buyer’s price is called BID. That’s why, if you think that GBP/USD will rise in price and decide to buy pound sterling, while it is cheaper and then to sell more expensively, it is possible to buy it only at the ask price. When you sell your pounds, buyer will offer you the BID price. This implies that if you opened a position, bought GBP/USD, and then want to close it, that is to sell pounds, that you just bought, you can make it only at a loss, similarly how it would be in any exchange office. So, if you want to get profit, price of currency must change and cover the difference between BID and ASK. The third number is called LAST, in FOREX market this is an average value between the latest BID and ASK.
So, opening position for USD/CHF and USD/JPY (i.e. buy) is going on at the BID price, and closing is going on at the ASK price.
The choice of a foreign currency trading service is not an easy task. And one shouldn’t hurry up 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 need at the best terms which are available on the market. Funny, but most of the people don’t use this chance. 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 or 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 discussion. All this will help you to create a true vision of this market. Thus, giving you a real opportunity to make a wise and nicely balanced decision.
And also sign up to the RSS feed on this blog, because we will everything possible to keep this blog tuned up to the day with new publications about the topic of learn foreign currency trading and important trends on the currency exchange market.
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