Defining the Better Form of FX Analysis
Two methods of foreign exchange market analysis are there:
1. Fundamental analysis takes into account economic, social and political factorsand how they impact the money markets.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
How do you determine the superior study? Research shows that traders have deep affinity for either one. The technical analysts contend that their style is the best for getting an early evidence of price movements.
On the other hand, the fundamental analysts will affirm that currency prices are moved by socio-economic factors, a fact that cannot be declined. Thus according to them, chart patterns are mere events that have no real consequence on reality.
That comment should be taken with a grain of salt. While the direct and broader effects of economic changes is certain, in post major announcements situations and relatively event and change free times, technical analysis may be of aid in predicting movements.
One forwarning for the technical analysis idealists is that there is a possibility that they will be caught unawares should interest rates suddenly change. If the analyst does not read the news then there is a big likeliness that they will make a bad trading call. This can end up in a major trouble.
The verdict therefore is that short term trading can benefit from finding out trends via technical analysis while the large price movements are mostly created by socio-economic or political forces. Keeping both eyes open is the more frugal proposal as it facilitates one to use mathematics to predict short term movements while monitoring current news and happenings that would effect movements on a longer term and greater eminence. After all money in the FX market is made when one operates based on predicted movement and that prediction comes to pass.
Currency market movements are a bit like elastic that can stretch in one way or another and then fall back, although not always to its beginning position. The fundamentals are the impetus that cause it to stretch. Technical analysis portends how far it will fare in each direction before reversing.
The deduction then is that a careful trader utilizes both methods. So to perpetually make profits in the forex market you must ascertain when to use which tool and how much importance you will give to their relevant, predicted outcomes. - 23222
1. Fundamental analysis takes into account economic, social and political factorsand how they impact the money markets.
2. Technical analysis however , employs graphs and charts to ascertain patterns that evince price movement.
How do you determine the superior study? Research shows that traders have deep affinity for either one. The technical analysts contend that their style is the best for getting an early evidence of price movements.
On the other hand, the fundamental analysts will affirm that currency prices are moved by socio-economic factors, a fact that cannot be declined. Thus according to them, chart patterns are mere events that have no real consequence on reality.
That comment should be taken with a grain of salt. While the direct and broader effects of economic changes is certain, in post major announcements situations and relatively event and change free times, technical analysis may be of aid in predicting movements.
One forwarning for the technical analysis idealists is that there is a possibility that they will be caught unawares should interest rates suddenly change. If the analyst does not read the news then there is a big likeliness that they will make a bad trading call. This can end up in a major trouble.
The verdict therefore is that short term trading can benefit from finding out trends via technical analysis while the large price movements are mostly created by socio-economic or political forces. Keeping both eyes open is the more frugal proposal as it facilitates one to use mathematics to predict short term movements while monitoring current news and happenings that would effect movements on a longer term and greater eminence. After all money in the FX market is made when one operates based on predicted movement and that prediction comes to pass.
Currency market movements are a bit like elastic that can stretch in one way or another and then fall back, although not always to its beginning position. The fundamentals are the impetus that cause it to stretch. Technical analysis portends how far it will fare in each direction before reversing.
The deduction then is that a careful trader utilizes both methods. So to perpetually make profits in the forex market you must ascertain when to use which tool and how much importance you will give to their relevant, predicted outcomes. - 23222
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