Types of Forex Market Analysis
Day trading is an activity that many people rely on to make an income and it only makes sense to put in proper effort to improve one’s trading experience. There are several ways of doing research, but they all can be placed into three broad categories. Forex analysis is often conducted with the sole purpose of determining when to buy or sell currency pairs. Research can be technical in nature where one decides to use various resources such as charting tools among others. similarly, research can be fundamental in nature where one relies on economic indicators and events in the news to make their forex trading decisions. In this article, I will be looking at three types of forex market analysis that traders use in their trading activities.
Fundamental analysis is usually conducted by way of keeping an eye on various figures that affect how business is conducted around the world. These figures include unemployment rates, interest rates, and GDP among many other economic data that are produced within economies or countries. If for instance a trader wants to trade in the EUR/USD currency pair, it would make sense to do research about economic factors that affect how business is conducted in the Eurozone. It would mean that one would be more interested in knowing what happens in the Eurozone that affect the strength of their economies.
Fundamental research requires one to pay attention to events in the news that affect the financial strength of economies. Even natural events that affect the financial positions of companies and economies are very important when one is conducting fundamental research.
Technical analysis is usually derived from manual and automated systems. It involves one analyzing technical indicators with the aim of making a buy or sell decision. This is done manually by the trader as they trade in their preferred currency pairs. When a trader decides to use automated systems, they basically “teach” computer software to keep an eye on certain signals so that they can execute buy or sell decisions.
There are several forex systems that have been designed that are capable of determining the likely direction of a given currency based on previous price movements. Both manual and automated systems have their own cons and pros that make them preferable in different situations. That is why traders have different preferences between automated and manual systems. Some traders even go ahead and use both manual and automated systems.
Weekend analysis isn’t really a form of analysis, but rather the kind of research that people perform over the weekend. This kind of analysis is often conducted for two major reasons. The first reason is when one needs to establish the big picture of a certain market. Markets are usually closed on weekends and that allows one to do research in preparation for the markets when they open on Monday.
The second reason for weekend analysis is to come up with plans for trading the following week. With this research, one can develop the kind of mindset necessary for the week up ahead. To succeed at cfd trading South Africa should be the first country you consider.