Experienced traders use fundamental and technical analysis to gather valuable market information. Learn the types of economic indicators to look for, and how to apply technical indicators to manage your trading strategy and minimize your risk exposure.
(1) FUNDAMENTAL ANALYSIS
Equities or commodities are valued by their intrinsic strength on an absolute basis, while foreign exchange is valued by the relative strength of one currency with respect to another. Some of the economic indicators that fall into the realm of fundamental analysis are interest rates, employment reports, and inflation reports, among others.
WHAT IS FUNDAMENTAL ANALYSIS?
Trading on the fundamentals – also referred to as trading the news – is the study of news events and economic statistics to determine trading opportunities. Referred to as fundamentalists, these traders pay close attention to changes in economic indicators such as interest rates, employment rates, and inflation.
(2) TECHNICAL ANALYSIS AND TOOLS
Technical analysis is a method of using market data, primarily past prices, and volumes to estimate future prices.
Technical traders use a variety of tools to identify trends and trend changes, thereby forecasting prices. These tools are based on mathematical concepts that are graphically represented for ease of analysis.
Learn to use charts and graphs to identify potential trading opportunities buying, or selling FOREX.
THE ART OF IDENTIFYING TRENDS
Technical analysts believe that prices move in trends, and price movements generally follow established patterns that can be partly attributed to market psychology based on the widely-held belief that participants in markets react in a similar fashion when faced with similar situations.
The field of technical analysis is based on three important assumptions:
FOREX COURSES AND HELPFUL LINKS
Mason Dean FX highly recommend the following online courses for new to experienced traders.
For a comprehensive guide to FOREX Trading, please click on the NFA e-book below:
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