Forex Trading for Beginners & Dummies by Giovanni Rigters

Author:Giovanni Rigters
Language: eng
Format: epub
Tags: forex trading, forex trading for beginner, forex trading for dummies, how to trade stocks
Publisher: Giovanni Rigters
Published: 2020-07-15T00:00:00+00:00

Chapter 5: What is Technical Analysis

The first strategy that we looked at when it comes to Forex trading is fundamental analysis. For many traders, that is the preferred method to go with. Fundamental analysis allows them to look at the currency, as well as the country, economy, and government behind that currency to determine if it is time to invest in a currency pair or not. It can work really well for a lot of traders, but another strategy that you may want to consider includes technical analysis of the currency.

Technical analysis is all about looking at what has occurred with currency in the past. You may look over the past week or look at a decade or more. This kind of analysis will have you take a look at a lot of different charts and graphs, and you may even have to look at some older newspaper articles and magazines to figure out why certain ups and downs occurred in the charts.

The point of doing all this is to get a good idea of all the trends and overall movements that occur with that currency. While this can work for a country that happens to stay pretty steady, there can be some issues that make it harder to work with this kind of analysis in the Forex market. For example, this kind of analysis is not able to make predictions about massive disasters or times of uncertainty in the market. Simply because a country hasn’t experienced these in the past doesn’t mean they won’t work in the future.

Most traders who use technical analysis will combine it with some of the other fundamentals that we discussed to strengthen their knowledge and ensure that they can see things from more than one angle. Of course, technical analysis is done mostly from charts (you can see if your broker offers these as part of a package on their platform), and then you combine these with other research such as checking the news and other fundamentals to make the best decisions.

The charts that you will use are known as price charts, and their job is to show you the exchange rate of a currency over time. Depending on the timeframe that you want to look at, it is possible that you will see a lot of information on that chart. For example, if you pick out a chart that spans a decade, the chart is probably going to look more like a flat line over time. But if you zoom in on the chart a bit more and look at just one year, you will see that there is a lot more movement up and down.

The time frame that you rely on is going to be really important. This is because a Forex trader has to really consider the time frame that they want to trade with. You want to look for a few things such as the best time to make a move when a trend starts moving. To do that, you

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