Home > Forex Articles > Forex Analysis: Which Type Is Better?

Forex Analysis: Which Type Is Better?

Todays Date: September 20, 2018

Fundamental and technical analysis are the two vital mechanisms used in the foreign exchange market.

1. Fundamental analysis concerns itself with scrutinizing socio-political and economic forces and concluding their effects on the market.

2. When the analysis is conducted specifically on the use of charts and graphs to study price movements and to point out trends, this is called TECHNICAL ANALYSIS.

So which is the more fitting avenue? If you check out forums and websites you will see many traders heavily supporting one or the other. Those who like to depends on charts will tell you that the only way to make money with currency trading is to distinguish trends and jump onto them as quick as possible.

However, those who regard fundamental analysis will maintain that the solitary drivers of the market prices are socio-political and economic attributes, a fact that has been proven time and again in maximum of the movements. They describe that any association between the charts and real time movements are completely by chance.

That assertion should be taken with a grain of salt. While the direct and gigantic effects of economic changes is incontestable, in post major announcements situations and relatively event and change free times, technical analysis may be of assistance in predicting movements.

But if you place all your confidence in technical analysis, unexpected announcements in influential financial news will perhaps catch you off guard. Since you would be relying on charts and not news, you may end up picking the unfavorable time to trade. Such an occasion could be calamitous.

So the crux is that there are economic circumstances behind the larger scale rises and falls in the market, but there are also characteristic patterns that can be poinpointed in the short term. Sighting these patterns and trends, while keeping one eye on the economic and political news, is the best method to predict future price movements. And predicting future price movements, definitely, is the way to make money with currency trading.

Markets are sometimes characterized in terms of elasticity as they can move in either direction and fall back to their starting or another position. The aspects that stretch the market are the fundamentals of socio-political and economic forces. How much it will stretch and where and when it will come is the area of technical analysis.

The deduction then is that a smart trader utilizes both methods. So to unceasingly make profits in the forex market you must understand when to use which tool and how much credit you will give to their reciprocal, predicted outcomes.

About the Author:
http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/digg_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/reddit_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/dzone_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/stumbleupon_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/delicious_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/technorati_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/google_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/yahoobuzz_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/mixx_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/twitter_32.png http://financearticledirectory.com/wordpress/wp-content/plugins/sociofluid/images/jamespot_32.png
Comments are closed.