Resorting to technical analysis of forex markets

bTechnical analysis is an integral part of the forex system. Analysis will always help you in keeping up with the pulse which is being generated in the market. And keeping up with this pulse will help you in increasing the profit margins tremendously. Hence traders in the forex market always resort to some form of analysis in order to increase their profits. Various types of analysis are being done by the experts in this field. And they are using it to their advantage to cash in on the market. Such techniques and strategies can be brought to light only with the help of marked experiences.

technical analysis

In order to learn more about the different analysis patterns, it is better to start thinking why do we need an analysis in the first place? You can literally make millions or loose something like that within weeks, if you do not resort to analysis. In a forex market currencies are always traded in pairs against a standard currency which is usually US dollars. The rise and fall of the currency pairs can be studied accurately with the help of such technical analysis. Currencies are bought when the value is low and sold when the exchange rate increases.

The same technical analysis can be applied to the normal stock exchanges too. One of the main differences between the two is the mode of operation. Stock exchange markets operate just eight hours in a day while forex markets are open all through out the day. Although that means that you can literally trade in any time of the day, your profit margins can be slightly increased if you stick to certain time periods. Some of the common technical analysis which is being commonly adopted by traders all over the world are listed in the following passages.

  • The performance of a market can be plotted in a graph paper and this can be used for the advanced prediction of various parameters. This is what Elliot Waves had found out.
  • The well known Fibonacci series is also commonly employed by some of the well known traders.
  • Stop and Reversal (SAR) techniques are also commonly employed in many brokerage firms to educate novice traders.
  • The average is also calculated and this resulting average is known as the pivotal point. The average of the highest and the lowest along with an arbitrary point is taken for the analysis.

These are some of the common methodologies which are being used by traders worldwide and these are known to be effective on the long run. There is also something termed as fundamental analysis. In here the analysis of the political and economic conditions of the nations which are taking part in the forex transfers is taken into consideration. To be precise the currencies which are being used in the forex market along with the nation which employs them are taken for crucial studies. This is a long term process and is often done by long term investors who are looking for high returns.