The foreign currency exchange market is an exciting venture. Yet, it is important to develop a proper strategy before stepping into the new market, especially when you don’t have a lot of experience. Analysis is a huge part of any tactic.
Although it can seem confusing at first, it’s a logical step to learn market analysis after choosing a broker such as through the FxCash catalog. Today, we will unpack its different types and how to apply it to your strategy.
Fundamental Analysis
Different types of analysis use various tools and information provided on the market. When it comes to the fundamental type, you should be manually studying particular economic data in the relevant regions, such as:
- GDP;
- interest rates;
- unemployment rates;
- major bank statements;
- retail sales.
Creating an economic calendar and noting down vital points connected to your currency pairs can be the first step to incorporating fundamental analysis into your plan. Additionally, watch forecasts and read news whenever possible to understand the countries’ economic health.
Technical Analysis
In contrast, you don’t have to do everything manually during a technical analysis. In this case, you can utilize countless tools and automated systems to help you understand the current forex market situation.
First, you take technical indicators and understand if you should sell or buy a currency. Then, you train the software to comprehend equivalent signals and interpret them similarly. In the end, the program will be able to analyze the behavior and help you make decisions automatically without manual labor.
Weekend Analysis
Since the forex market is not active during the weekend, you can take that time to study the landscape and get a full picture of the currencies you are curious about. During that period, you won’t have to stay on your toes, as there won’t be anything grand happening. Instead, indulge in a weekend analysis and envision your plan for the upcoming week.
Using Analysis in Your Strategy
Successful trading lies in experience and practice. Understanding how the market works and reacts to distinct economic shifts can help you make wise decisions.
So, don’t ignore analysis – look at long-term charts, notice how markets change directions, and point out big shifts. Once you can do that, move on to short-term charts to pick the best moment to enter the trade. This tactic is often called a multiple time frame analysis, where you get numerous chances to enter successfully, even if the first time fails.
Technical analysis is better suitable for short-term trades, while fundamental one can benefit long-term investors. Taking a break to study the market on the weekend is an outstanding plan for anyone, regardless of their strategy.
Study the Forex Market Through Analysis
Trying out diverse analysis methods allows you to look at the forex market from different perspectives. It’s not just an option but a strategic step towards foreign currency exchange trading success and bigger returns on the market.
