Which Do You Choose Technical or Fundamental Analysis?
In forex trading or foreign currency transactions require predictions before placing a sell or buy position. Forex analysis is an attempt by a forex trader to be able to know the conditions of the forex market and predict the direction of future price movements. Without this method, traders can find it difficult to read profit opportunities and even losses that will be faced. Therefore, every trader needs the right forex analysis techniques to easily read market movements while increasing profit opportunities. In general, there are two types of analysis, namely technical analysis and fundamental analysis.
Technical Analysis
Technical
analysis is considered to have more tools than fundamental analysis. However,
because it is quite difficult to use, it requires a deep understanding to be
able to use it properly.
This type of
forex analysis is used as an analytical method that is able to predict the
direction of future price movements by studying market price data in the
previous period that has formed a chart. This type of analysis focuses more on
the charts and indicators available on the trading platform. Technical analysis
includes the forms of price movement patterns to determine the high probability
of entry and exit. The existence of interpretations and applications today has
made it easier for traders for technical analysis. Traders can also know and
study the character of price movements so that it is easier to find
opportunities in the current price movement.
Fundamental Analysis
In this type
of analysis, traders seek to examine economic factors that are indicators of a
country's economic health and their impact on the forex market. The focus of
fundamental analysis in the forex market is central bank interest rates.
However, some other important data that can be observed in fundamental analysis
are employment (number of jobs, unemployment, salary growth), inflation,
industrial production, manufacturing business climate, GDP, and so on.
Through this
analysis, traders can capture opportunities that may arise in a released data
so that they can then determine strategic steps and have good considerations
before entering the market. In addition, traders can also understand the global
trend of a particular currency and its relation to the dynamics of a country's
economy.
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