1 Nov, 2006
Choose your type of forex analysis
After you learned all the basic terms, covered all the aspects of the foreign currency exchange market and you’re about to sign in your online trading software you downloaded from the firm (and broker) you have punctiliously chosen, it is the time to learn what analysis possibilities you can use for predicting movements and smart investing choices. The everlasting debate is between two different points of view; the technical approach and the fundamental approach.
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The technical approach believes that observing the market movements or price action of a specific currency pair can be used as a tool for forecasting future movements. Technicians usually disregard the fundamental approach and its way of predicting the market based on news and other aspects which relate to a county’s fundamental statistics as uncertain and ambiguous. On the other hands, fundamentalists mock the technical approach and compare it to the way idolaters tried to prophet the future by staring at sculptures. The fundamental approach uses interpretation from monetary officials, economic reports and indicators in attempt to predict price movements and the foreign currency exchange market behavior in general.
If you seek my professional advice, choosing to forecast the market by adopting only one of those schools is a recipe for losing money. It is the same as trying to finish a marathon using only one of your legs. From personal experience, even when you can clearly see by charts and past movements that, for example, the EUR/USD is going to break a resistance point and start a strong bullish trend, it is just as likely that some unexpected economic news surprises the foreign currency exchange market and that the EUR/USD would make a razor-sharp dive downwards.
For conclusion, act like the pros and be aware of how both systems can predict the market. Learn how to read and use all the tools available for you, fundamental and technical, and I promise you will start making money like the big boys.
