In Currency Trading, Technical vs. Fundamental Analysis


In Currency Trading, Technical vs. Fundamental Analysis

Fundamental vs Technical Analysis in Currency Trading

Fundamental analysis of Trading The News

A news trading strategy is based on fundamental analysis. This involves analyzing the market's news, following a schedule, and making the most of it to make profits. Forex market news can impact the market even before it is released. 

Traders use this method to predict the likely reaction and engineer their deals to reflect the market's immediate reactions.

This is why basic analysis users follow the principle of "buying the rumor, selling the news", which you may have heard many times before.

Basic Analysis: Oscillators & Technical Indicators

This type of study, also known as "technical," relies on mathematical and statistical indicators to help determine when deals should be closed or opened.

Moving averages, Bollinger Bands, and stop and reversal indicators are some of the most common. Indicators confirm the current trend's strength, while oscillators try to predict the future.

There are numerous indications from which traders can select. This is why traders only need to understand the basic concepts of a few indicators. A trader can combine multiple indicators to verify signals from each one and better predict long-term price movements within the market.

One example of a preferred strategy to combine indicators is the "moving average crossover", where the trader draws two moving-average lines, one simple and one exponential. Then, the trader makes buying or selling decisions at the intersections of those lines.

Combination Of Various Analysis Methods

It's not common for traders to rely on just one analysis method, as it is difficult to find a trader that does. Fundamental and technical analyses are crucial in helping traders decide when to close or open a deal. To make money from currency trading, you must learn how to combine the two types of analysis.

What's Forex Trading?

Forex trading allows you to trade different types of currencies directly. In the past, rate trading was restricted to large banks and trading firms. However, the internet trading platform makes it easy for small traders to take advantage of forex trading's many benefits.

All world currencies are quoted at a floating exchange rate and traded in pairs. Around 85% of international transactions involve the trading of major currencies.

Dealers handle forex transactions at other forex banks and brokerage firms. Forex is now a vital part of global markets. Once you're asleep, European dealers trade currencies in forex with their Japanese counterparts. 

The forex market is open all day, and major institutions have three shifts per day, which means that dealers work seven days a week, twenty-four hours a day, and are available to trade currencies with their counterparts in Japan. The brokers can execute Stop Loss or Take Profit orders on clients' behalf. Forex market price movements are extremely smooth.

There are no gaps in the value you will encounter nearly every day in the largest stock exchange. Forex market volume is approximately 1.2 trillion dollars daily, so any new investor can easily open and close trading positions.

It is a fact that forex trading doesn't stop. You can still trade currencies event on September 1, 2011. The currency market is the oldest and largest financial market in the world. The forex marketplace is also known as the exchange market. It is the largest and most liquid global financial market and can be traded 24 hours daily in the interbank currency marketplace.

You may be surprised that only 1% of the volume is exchanged on a currency commodities exchange. Unlike the stock and futures markets, currency trading does not take place on a central exchange. The trading moves from the US's top banking centers to Australia and New Zealand, then Europe and the Far East, before returning to the USA. It's a very circular trading market. 

Due to the high minimum transaction size and strict financial terms, the interbank forex market was not available to small speculators in the past. Dealers were banks, large currency traders and occasionally very wealthy speculators. They are the only ones who can enjoy the amazing advantages of the currency market, such as the huge liquidity and strong trend nature of many global exchange rates.

Forex brokers can now split larger interbank units, allowing small traders like you and me to buy and sell various smaller contracts. Brokers allow any trader to trade at the same prices and experience the same market movements as the big players in the past, regardless of their size.

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