Featured

Understanding the Forex Analysis

            Foreign Exchange or FOREX is the method used by traders to exchange currencies. You might have heard about this term or have read about it in newspapers or online news. But do you really know what FOREX is? Can anyone be a part of it? Some people say that this is only for expert brokers. Others would say that even simple people can earn money through Forex Trading. How true is this?

With the economic turmoil that we are currently experiencing all around the globe, people are finding ways to earn extra income. More people are growing an interest as to how they would be able to join the group of traders who have front row access to “unlimited money”. Being a forex trader doesn’t require any physics or management degree. Even high school dropouts can be a successful Forex Trader. However, to be a successful person in this field, you need to learn everything about how it works which may include basic and complex information. Prepare yourself for success as well as failures.

The Methods of Analysis.

             In Forex Analysis, analyzation skills are very important. As part of your Forex Education, it is best to know what are the methods of analysis. There are two ways to analyze forex data. Fundamental analysis, which uses economic indicators, and Technical analysis, which utilizes charting tools.

  • Fundamental Analysis. This type of analysis is often used by traders to study the forex market factors like interest rates, unemployment percentages, the gross domestic product and other economic releases by the country.
  • Technical Analysis. This can be a manual or automated type of analysis. A manual system is where traders will use technical indicators to interpret data, and whether to buy or sell. The automated system will involve a trader setting the software on how to look for a certain data and once found, will interpret them.

The Importance of Chart Reading.

            On Forex Trading, reading charts is one of the most important things that you have to learn. There are a lot of training methods when you are dealing with Forex Exchange. But whatever your method is, you need to learn how to read a chart. It might get a little confusing at first, but as you go along, reading charts will be smooth without any question. Charts are graphical demonstration of the exchange rate between currencies. It will show you the trend of the exchange rate, whether it’s going up or down over a period of time.

The Forex Charts.

            Forex traders have been through trial and error periods when it comes to depicting trading data. In a forex chart, there are three main chart types. The line, bar, and candlesticks. The candlesticks type is the most popular among forex traders. The reason is, with the line chart, the price is too close to each other, where the candlesticks are four times the amount of the information. It shows the close, open, and the high and low of prices at a given period of time. Because of this, it is much easier to know how the price has changed.

            The red and green portions of the candle are called the “body.” The body will represent the difference between the opening and closing price of the currency. When the opening price is lower than the higher, the candle is green and when it is the opposite, the body of the candle is red. The black lines that you can see above and below the candles are the “wicks” or “shadows.” Wicks are the highest and lowest prices reached on a given time.

When learning about Foreign Exchange, even the most basic information is essential. Always remember to avoid predicting the future. Follow the data provided by your analysis. Remember that you just have to follow what your chart tells you. No need to make it complicated.