Trading Indicators: Fundamental or Technical Analysis?

One of the key indicators of successful Forex trading is to accurately predict the upcoming price movements of a market.

Different techniques are used when trading. Some traders follow patterns and some follow different news to guide them in their decision making. It uses strategic analysis or fundamental analysis but these strategies are still classified. Some traders use basic analysis, some use technical analysis, some use a combination of both.

As a trader, it is important to know these two analyzes. This can help with Balstar strategies that can provide more consistent profits for your account.

Technical analysis

Technical analysis is a method that predicts the direction of market prices through the study of historical market data. This is one of the most common methods of doing business. This analysis is very easy to learn and it is well known to many traders especially those who prefer day-trading. This strategy is considered as a kind of trading hack due to its high probability of making a profit.

Various equations are used in this analysis which are applied to individual charts. These equations are known as indicators – data that measures market conditions to calculate economic trends. These indicators provide historical data for a specific market. It presents the history of price activities and the amount of prices in that market.

To use this analysis effectively, a trader needs to understand how to use the Relative Index (RSI), Moving Average Conversion-Divergence (MACD), Money Flow Index (MFI), Stochastics and many more. Profitable forex traders often use many indicators when trading. These indicators illustrate a particular aspect of historical data. Despite its effective methodology, this analysis does not guarantee a 100% forecast of any asset price movement.

Basic analysis

Like technical analysis, fundamental analysis tries to predict the price movement of a particular market. The most popular trader using fundamental analysis is Warren Buffett et al. Traders who have mastered the use of this analysis claim that this method demonstrates a broad view of the movement of incoming prices in a particular market.

It is important to know the basics of Forex trading. This analysis presents the key economic indicators of the market. This is one of the most important factors in analyzing the eight currencies that are traded in the foreign exchange market (dollar, EUR, GBP, AUD, CHF, JPY, ZAR, and NZD).

Here are some basic analysis traders should always check: central bank interest rate decision, employment report, consumer price index (CPI) and gross domestic product (GDP). These reports will always affect the price of a currency.

Another issue when using fundamental analysis is the economic calendar. This calendar indicates upcoming economic events. As a trader it is important to always be aware of global economic events. The worst nightmare of a businessman caught in the wrong position after the economic announcement.

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