There are two main analysis in forex trading. Fundamental analysis and technical analysis. The expert in fundamental analysis focus on the underlying causes of price movements, and technical analysis expert studies the price movements themselves.
Major factors that fundamental analyst concern are economic, social, political, geopolitical forces. Those drive supply and demand a lot . Fundamental analyst concern on macro economic indicators such as economic growth rates, interest rates, inflation, unemployment, etc. However there is no specific rule how to analyze fundamental in forex trading, but some theories may valuable to appreciate. Don not even try to analyze the fundamental unless you are the financial expert. Let’s them do this for us and follow their lead by reading the forex trading charts.
Technical analysis concern on price movements. Historical data of currencies used to forecast the price direction in the future. Technical analysis premise is that all current market information is already shown in the price of that currency, so knowing price action is all that required to make informed trading decisions. The main tools of technical analyst are charts from trading software. Charts used to predict trends and patterns to make decision to open trade or close trade to get some profits. The basic theory of technical analysis is that market have a tendency to trend. Skill full to find in their earliest stage of development is the important one in technical analysis.
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