CALVINDOL
VIP Contributor
There are two main types of analysis used in forex trading: technical analysis and fundamental analysis.
TECHNICAL ANALYSIS: Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts believe that the historical performance of a currency pair can indicate the likely future performance. Technical analysts use charts and various technical indicators, such as moving averages and relative strength index, to identify patterns and trends in the market.
FUNDAMENTAL ANALYSIS: Fundamental analysis is a method of evaluating a security by analyzing its economic and financial fundamentals, such as its earnings, dividends, and economic indicators. Fundamental analysts believe that economic and financial factors can indicate the likely future performance of a currency pair. Fundamental analysts will look at economic indicators such as GDP, unemployment, inflation, and interest rates to get a sense of the overall economic conditions of a country.
Both types of analysis are used to predict the future direction of the currency pair, but they use different data and methodologies to do so. Traders might use a combination of both analysis to make a better decision and have a better understanding of the market. It's also worth noting that there is another type of analysis called Sentiment analysis which is based on evaluating the emotional and psychological state of the market. Sentiment analysis can be used to identify market trends and to understand how traders feel about a particular currency pair. It's necessary to note that no one method of analysis is perfect, and traders should use a combination of different tools and methodologies to make informed trading decisions.
TECHNICAL ANALYSIS: Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts believe that the historical performance of a currency pair can indicate the likely future performance. Technical analysts use charts and various technical indicators, such as moving averages and relative strength index, to identify patterns and trends in the market.
FUNDAMENTAL ANALYSIS: Fundamental analysis is a method of evaluating a security by analyzing its economic and financial fundamentals, such as its earnings, dividends, and economic indicators. Fundamental analysts believe that economic and financial factors can indicate the likely future performance of a currency pair. Fundamental analysts will look at economic indicators such as GDP, unemployment, inflation, and interest rates to get a sense of the overall economic conditions of a country.
Both types of analysis are used to predict the future direction of the currency pair, but they use different data and methodologies to do so. Traders might use a combination of both analysis to make a better decision and have a better understanding of the market. It's also worth noting that there is another type of analysis called Sentiment analysis which is based on evaluating the emotional and psychological state of the market. Sentiment analysis can be used to identify market trends and to understand how traders feel about a particular currency pair. It's necessary to note that no one method of analysis is perfect, and traders should use a combination of different tools and methodologies to make informed trading decisions.