Methods of Analyzing Forex Market Movements

By  //  November 30, 2020

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Trading in currency pairs is not going to be for everyone, as there is a lot of fast action and it can be difficult to predict. That is why having a top of the line broker, thorough market research, and a variety of analysis tools is so important to success. You must take advantage of all the tools that are available.

There are thousands of various strategies and systems out there for trading, but they are useless if you don’t know your market.

Understanding why and how certain pairs are moving, why something is stagnant, and where the significant risks are will help you use your money to earn a profit. It isn’t just about finding the lowest spread forex broker, there is a lot more that you must do to succeed.

Main Analysis Methods

With forex market analysis there are three main methods that you want to be familiar with, and each of them tackles it in a different way. Each method will utilize different tools and give you insight into various aspects of your focused markets.

The Fundamental Method

As the name suggests, the fundamental method looks at information that is fundamental to the economies of the currencies in question. You would be looking at figures such as GDP, interest rates, and unemployment rates, as well as any local news that could affect the value of a currency.

By analyzing how a particular area is doing on a fundamental economical level, you will be better able to predict if a currency value is going to increase or decrease. With this type of information, you can minimize your risk and extend your ability to earn money.

The Technical Methods

Technology has vastly improved the various automated technical methods of market analysis, and you can essentially have it all done for you. These automated systems offer predictions based on past performances, but you may also manipulate them to take other factors into account manually.

Technical analysis methods are getting more complex all the time and can be advantageous for traders who just want to use the cold hard facts and data to trade. There can be emotion, bias, and more involved in market analysis, and an automated system helps keep those things in check.

The Weekend Method

This method is going to be precisely what it sounds like, analyzing the markets you are interested in while they are asleep. During the weekend you are going to have more time to see what has been happening, as well as no need to be on guard to react to big news or fluctuations on the market.

You are going to have plenty of time to plan what you want to do throughout the next week, and not have to worry about actual trading. Take this weekend time to learn as much as you can about the condition of the markets, as well as plan your coming attack.

What to Do With the Information?

If you are going to get into the habit of consistently doing market analysis and planning, like the many forex brokers in Australia, it is important to keep track of it all in the long term.

Take advantage of computer software to chart changes, plot particular important dates, and make your trades have more impact. While no method is going to be perfect, the more information you have, the better chance to do well on the markets.