Foreign Exchange Analysis: Which Method Is Better?
Two forms of foreign exchange market analysis prevail:
1. Fundamental analysis concerns itself with scrutinizing socio-political and economic forces and concluding their influence on the market.
2. Technical analysis contrastingly , employs graphs and charts to surmise patterns that connote price movement.
Choosing one over the other is not spontaneous. A cursory surveying of currency trading related forums and websites show traders being staunch advocates of either one of these methods. Those who admire technical analysis dispute that graphs are the only technique that can predict way ahead of time the trends which is crucial to making a profit in trading.
On the other hand, the fundamental analysts will allege that currency prices are actuated by socio-economic factors, a fact that cannot be declined. Thus according to them, chart patterns are mere concurrences that have no real effect on reality.
This nonetheless, is not a foregone judgement. While the vast impression on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be ascertained from price movements specially in the wake of announcements or during periods with no big announcements.
One warning for the technical analysis idealists is that there is a probability that they will be caught unawares should interest rates suddenly change. If the trader does not read the news then there is a big probability that they will make a bad trading call. This can end up in a major blunder.
The verdict therefore is that short term trading can benefit from finding out trends via technical analysis while the large price movements are typically created by socio-economic or political aspects. Keeping both eyes open is the more thoughtful method as it empowers one to use mathematics to predict short term movements while monitoring current news and eventualities that would effect movements on a longer term and greater degree. After all money in the currence market is made when one executes trades based on predicted movement and that prediction comes to pass.
Currency market movements are quite like elastic that can stretch in one way or another and then fall back, although not always to its opening position. The fundamentals are the impetus that cause it to stretch. Technical analysis envisions how far it will reach in each direction before reversing.
Hence you would be well advised not to be a loyalist in either style of analysis. Sizable returns are realized better when fundamental and technical analysis are made use of together. - 23212
1. Fundamental analysis concerns itself with scrutinizing socio-political and economic forces and concluding their influence on the market.
2. Technical analysis contrastingly , employs graphs and charts to surmise patterns that connote price movement.
Choosing one over the other is not spontaneous. A cursory surveying of currency trading related forums and websites show traders being staunch advocates of either one of these methods. Those who admire technical analysis dispute that graphs are the only technique that can predict way ahead of time the trends which is crucial to making a profit in trading.
On the other hand, the fundamental analysts will allege that currency prices are actuated by socio-economic factors, a fact that cannot be declined. Thus according to them, chart patterns are mere concurrences that have no real effect on reality.
This nonetheless, is not a foregone judgement. While the vast impression on the forex market, of variations in the economic and politcal spheres, cannot be denied, patterns or trends could possibly be ascertained from price movements specially in the wake of announcements or during periods with no big announcements.
One warning for the technical analysis idealists is that there is a probability that they will be caught unawares should interest rates suddenly change. If the trader does not read the news then there is a big probability that they will make a bad trading call. This can end up in a major blunder.
The verdict therefore is that short term trading can benefit from finding out trends via technical analysis while the large price movements are typically created by socio-economic or political aspects. Keeping both eyes open is the more thoughtful method as it empowers one to use mathematics to predict short term movements while monitoring current news and eventualities that would effect movements on a longer term and greater degree. After all money in the currence market is made when one executes trades based on predicted movement and that prediction comes to pass.
Currency market movements are quite like elastic that can stretch in one way or another and then fall back, although not always to its opening position. The fundamentals are the impetus that cause it to stretch. Technical analysis envisions how far it will reach in each direction before reversing.
Hence you would be well advised not to be a loyalist in either style of analysis. Sizable returns are realized better when fundamental and technical analysis are made use of together. - 23212
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posted by X - Men @ 6:23 AM
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