Quick Read Forex Market
Forex is an exchange transaction between one currency for another. Exchanging rupiah for dollars and vice versa is a forex transaction. Here's how to analyze forex:
Know the Different Types of Forex Analysis
In general, forex analysis can be grouped into three types, namely technical analysis, fundamental analysis, and market sentiment analysis. The following is an understanding of each type of forex analysis:
- Technical Analysis, which deals with historical monitoring of asset price movements in financial markets using graphs, mathematical formulas, and certain statistical principles. The practice of analyzing forex based on technicals will be done by using candlestick charts or other types of charts, as well as technical indicators such as moving averages, RSI, stochastic, etc. that are available on the trading platform.
- Fundamental Analysis, focuses on monitoring price movements in financial markets based on economic data and other news headlines that affect it. The practice of analyzing forex based on fundamentals will be carried out by following the latest economic data releases on the forex calendar and international economic news sites.
- Market Sentiment Analysis, observes the attitude of the majority of market participants that affect price movements at a certain time. The attitude of market participants can arise as a result of technical assessments, fundamental evaluations, responses to an event that is feared to occur, or other situations. Usually traders can monitor market sentiment from candlestick charts, buy or sell sentiment ratio data provided by brokers.
Each trader can choose for themselves which type of analysis to focus on. You can choose only one. However, all traders should understand how to do all three at once, because they all cover the factors that influence the movement of the forex market. Professional traders usually take advantage of all three types of analysis at once to get a comprehensive picture of market conditions.
The Simplest Way To Analyze Forex
Of course it takes a long time to learn the three types of forex analysis above and apply them in daily trading activities. Most beginners are not patient enough to do it, because they want to quickly gain profits from forex trading. Actually there is also the simplest way to analyze forex that even beginners can do. Here's the sequence of steps:
Open the chart of the forex pair to be traded: After installing Metatrader, usually traders will immediately see the EURUSD (Euro-Dollar) pair chart. Traders can directly analyze the chart of the pair, or choose another forex pair. To change the chart display in Metatrader, Traders can drag (drag & drop) symbols from the MarketWatch window on the left to the chart area on the right. Beginners should start trading only on major pairs, namely EURUSD, GBPUSD, USDJPY, or AUDUSD.
Choose a timeframe for trading: At the top of the chart, the trader can see the forex pair symbols and timeframes. For example, a trader is looking at a chart of the EURUSD pair with the Daily timeframe. That is, each candle bar on the chart represents the dynamics of daily price movements. Apart from the Daily timeframe, there are various other timeframes ranging from 1 minute (M1) to 1 month (MN). Timeframe options can be changed. To do this, right-click on the chart area, then click the "Period Range" option, then click the desired timeframe option. However, the Daily timeframe is usually sufficient as a learning tool.
Pay attention to what trend is going on at that time: There are three types of trends in forex, namely bullish trends (prices move up), bearish trends (prices move down), and sideways (prices move up and down within a limited range). To find out, look at the leftmost area of the graph. Then draw a line to connect the “peak” or “valley” of the price movement.
Install technical indicators to get trading signals: After knowing the current trend conditions, traders need to predict where the next price movement will go. Will it continue to be bearish, or reverse up? For example, here we will install the Relative Strength Index (RSI) indicator. It's easy, click the "Insert" menu at the top of Metatrader, then click "Indicators", then select "Oscillator" and "Relative Strength Index", then click "OK".
Read the signals that appear from the technical indicators that have been installed: From the RSI indicator that has been installed, traders can conclude whether the next price movement will continue to decline or reverse up. The important key here, traders must know first how to use the RSI or other indicators that you want to use. If you don't know anything, then you certainly can't read it.
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