Technical Analysis in Forex Trading

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Technical Analysis in Forex Trading

Technical Analysis is based on some assumptions. One of these assumptions is the idea that history repeats itself, in the case of forex trading, refers to price movements. The price movement is attributed to market psychology. There was a formation of patterns and it shows that in the past there were several same or similar reactions to the market stimuli over time. Those patterns in the charts are used to analyse the market movements and understand trends. These charts have been used for more than a century and are still relevant.

Second, price movements follow a trend. Once the trend is established, the future price movements likely to follow that particular pattern.

Third, it is assumed that factors such as a company’s fundamentals, the wide economic factors, and market psychology are all priced into the stock, hence there is no need to analyze these factors separately.

Now we need charts for the analysis. There are three types of charts namely Line Chart, Bar Chart, and Candlestick Chart.

Line Chart is the simplest of all other charts and is the best one if you only need an overview of the price movements. It is drawn from one closing price to another on any time span.

technical analysis

Candlestick Chart represents details of prices with candle-shaped bars. The black or red candle shows a bearish move. The white or hollow or green candle show a bullish move. The largest area with four edges is the body. The verticals lines on top and bottom of the body represent high and low price ranges in a chosen time frame. They form various shapes and patterns that reflect what’s going on in the market.

technical analysis

Doji pattern looks like a cross or a plus sign because the body has the same opening and closing price or has an extremely slim body that makes it appear like a dash over the candlewick. There are four common shapes of Doji – Natural Doji, Dragonfly Doji, Gravestone Doji, and Long-legged Doji.

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Fundamental Analysis in Forex Trading

Fundamental Analysis in Forex Trading

Fundamental Analysis in Forex Trading

In order to make profitable trades, forex traders examine certain changes that could help them make gains out of the most volatile market in the world. Forex analysis is so necessary to complete the goals of making profits, includes few types of analysis. Fundamental Analysis and Technical Analysis are the two important forex analysis, careful study of which could result in gains otherwise can lead to losses. Both the type of analysis has its devoted users while there are traders who make both the analysis to trade.

Fundamental Analysis involves studying the economies of the world, its official economic data reports, and news to determine the health of an economy, ultimately the strengthening or weakening of the currency. Technical Analysis involves analyzing the charts and identifying similar price trends that have happened before and determine the present and the potential price movement. Much like analyzing the charts with the idea that “history repeats itself”.

Let’s look more into Fundamental Analysis here.

When you make a fundamental analysis, you would have to look into the economic, social, and political situations of the economies, find the answers, and apply it to your decision to place the trade. Ways to get the information on these significant situations of the economies is through the economic data reports which can give you an idea of the currency of an economy is strengthening or weakening; traders can use economic calendars and visit economic news website to get the updates.

Smart analysts already have a consensus even before the reports are released. Pieces of information on GDP, Non-Farm Payrolls (NFP), Purchasing Managers Index (PMI), Institute for Supply Management surveys (ISM), and inflation data are some of the major fundamental indicators to decide on placing a trade.

GDP that is reported quarterly for most countries gives you an indication of which direction the economy is moving and where it may go in the future comparing with the previous quarters. It is useful for long term traders. Currency traders look for positive and negative economic growth to find the best opportunities to go long or short a currency.

NFP released on the first Friday of every month can produce extremely volatile movement in the markets. While some traders place trades before and during non-farm payrolls, some traders wait till these shock waves diminish.

Purchasing Managers Index (PMI) surveys in Europe & China and Institute for Supply Management surveys (ISM) surveys in the US release data usually the first week of every month with a varying day of the release in each country. These surveys tend to have a close relationship with GDP and are a timely signal of the positive and negative growth in an economy.

Inflation data is usually released in the middle of each but can vary to different countries like Australia and New Zealand where it is released quarterly. There are two types of inflation to look out for – Consumer Price Index (CPI) and Producer Price Index (PPI). The CPI data measures changes in prices paid by the consumer for goods and services. The PPI data measures changes in prices of items as they leave the factory gate.

These are some of the useful ways to get information for the fundamental analysis that traders can use to decide to place the trade. In our next blog, we will look into technical analysis for forex trading in detail. Stay updated!

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Investoforex Free Signals Service

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Investoforex Free Signals Service

Free signals are a great option if you do not want to access premium signals. Traders can find free signals on various platforms. Some traders might think free signals are not reliable like the premium ones. In some cases, it can be true but they can be as accurate and useful as the premium ones depending on which provider you choose. Free or not, accuracy varies from one provider to another.

Free signals are provided by both genuine traders, companies, and scammers. Genuine signals providers offer it to traders so they can try and decide if they want to upgrade to premium ones. While scammers offer free signals and stolen trading records probably from other signal providers to loot your hard-earned money at some point of time. They are the ones traders should be careful about.

So should you use free signals?

There is no harm in using the free signals with caution. Traders can look for a trading history of the signal providers that goes back to 6-12 months. If you are an experienced trader you can use the free signals to save some time and money. Beginners can use these signals as well, however, while starting out they should be careful not to be so dependent on the signals.

We provide up to 2 premium signals for free per day in our official Telegram channel named Investoforex where traders can expect mostly signals on Gold. Signals on other major forex pairs, oil, and cryptocurrencies are also provided at times. Traders can get offers on weekends on the channel too. Join our channel and the signals for free with an accuracy of 90%.

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Get Started with Forex Trading

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Get Started with Forex Trading

When you want to learn something new, you search and read or watch a video related to that. You try to find out what it is, how it works, and why it is important to some people and even to some big institutions. There are several sources to learn from and it becomes more important what source you choose to learn about it.

If you are reading this, you are probably interested in forex and related. The foreign exchange market which is shortly called forex or currency market is an over-the-counter market for trading various national currencies. It’s decentralized, which means it has no central locations where it operates but rather a network of institutions and individuals connected through various online platforms. This largest market stays open 24 hours a day and five days a week.

Many individuals enter the market and trade in the hope to make profits but many lose money because they did not take the time to learn it properly and may have got scammed. Whatever field or market you choose, if you want to make gains you have to invest in yourself first. Take up classes to learn skills that are related to your chosen fields. There are two ways to learn. The first one is to learn from experts. The second one is to learn on our own. Learning on our own is not a bad option. But why and when should you consider getting an expert instead of learning on your own? How many of us can learn it correctly without guidance?

When you learn on your own, you need to have great discipline and frame a structure you can follow. While doing so, you are going to make many mistakes along the way. And mistakes aren’t bad until it becomes so unhealthy for your account to the point you are not able to recover the loss. The time and money that one could invest in searching for a genuine expert and learn through a structured course, gets wasted.

The advantage one gets when they learn from an expert is that there is a structured course to follow step by step rather than learning from scattered sources. An expert helps you learn the basic idea of trading, help you create a strong foundation, analyze the chart, clear misconceptions, guide you to choose the right broker for you. You can learn techniques to control your emotions and strategies that best suits you. Many people want signals because they have this idea that strong signals are enough to make profits completely ignoring the fact they first need to understand their moves and analyze before they trade certain pair.

Keeping in mind the needs of different types of learners, we Investoforex have come up with three structured forex courses namely – Basic Course, Core Course, and Pro Course. Basic Course is for those who want to enter the market. It includes basics of trading right from learning forex history, placing trades, buy-limit, sell-limit, swing trade, scalping trade & intraday trades, choosing broker, affiliate marketing, till analyzing a chart. Core Course is an intermediate course best suited for those who are already trading for some time. It focuses on risk management, guiding the trader on when to enter and exit the trade, how to make a profit with minimum risk, chart analysis, strategies, how to apply the best indicator and helps you identify a profitable trade. The Pro Course is the whole package of Basic, Core plus advanced forex trading. If one wants to learn forex from the beginning till the advanced level then this is the right course for them. You can learn whatever topic that is there in the previous two, plus advanced trade risk management, high probability trading set up, chart analysis, wave analysis, candlestick patterns, Price action, Wave analysis, fundamental analysis, technical analysis, and how to make least losses. These courses are structured carefully so it’s easier for the learners to grasp the concept.

It’s never too late to invest in yourself. Get a quality forex education and learn this invaluable and rewarding skill for life. Visit our website HOME – Investoforex and browse through the information provided.

Learn. Earn. Grow.

 

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