All information about forex system, forex strategy, forex demo and others

Forex Technical Analysis Tutorial

In this tutorial you will learn how to implement fundamental analysis in your trading style. This is what some people called institutional Forex trading system.
You should learn the basic macroeconomic factors that influence global market. This is called fundamental analysis.

There is a great controversy between traders that use only technical analysis and traders that use only fundamental analysis. For me this is only academic. If there is information out there you should carefully watch it. Do not rely only in technicals or fundamentals. Use both. When you have a solid technical pattern that is supported by fundamentals then the chance that you are right is imminent. When technicals and fundamentals show in different directions then you should watch out. Do not be trigger happy with your Forex trading. Wait and see. Forex is not for prophets. You use scientific analysis in order to maximize the chance that you correctly recognize what the market has to give you. Examine thoroughly, have a solid technical pattern, know the fundamental support of your analysis and you have a nice trading decision. Seize your risk tolerance and you will be a winner. Forex Technical Analysis Tutorial

Every nation has it’s central bank which is responsible for the well being of the economy. Central banks watch some economic factors that affect the economy and adjust their economic policy accordingly. These factors are announced regularly and the exact time of the declaration is known in advance. These factors are the fundamental indicators of the economy. The most important central banks are FED of USA, ECB of European Union, BOJ of Nihon and BOE of United Kingdom. There are many fundamental indicators but there are few of them that are called the “market movers”. They are called so because when they are announced they wage to the market the necessary steam to move. That happens because they have a great impact on economy and to traders’ positions also.

The most important thing you have to know about fundamental analysis is the market expectation of an indicator. Some analysts wage a probable number of the indicator to be announced. This has an impact to the market and traders are positioned accordingly. When the indicator is announced it affects the market only when it is much different that the market expected. That happens because each acquirable to the public information is already taken into account. When the new information is announced then it has impact on the market only if it is different than expected.

Build up your plan. Know in advance what important fundamental indicators are to be announced the following week. Learn the expected number if it is acquirable and try to forecast what will happen if it comes in superior of worse figure. This is difficult for the beginners but after studying it will be easy.

There are many fundamental indicators. US indicators have the greatest impact on market. European Union’s indicators have less impact unless they are much different than expected. Watch out for central banks head officers talking out and giving clues about inflation and interest rates. This day these are the two drivers of the economy. Words like vigilant or very vigilant about inflation from central bank’s heads have great impact on the currencies. Forex Technical Analysis Tutorial

What exactly is the difference between fundamental and technical analysis? And why is it so important for the day trader to have an intimate knowledge of both styles of trading? Put simply, the majority of new traders who enter into the markets, filled with dreams of wealth, do not have a good enough foundation of knowledge with which to build up a successful trading career with. And precisely how does one build this knowledge? Begin with the basics of both technical trading and fundamental trading.

Technical trading is hugely favourite with intraday traders. If you are a new trader you will benefit from swift entry and exit from positions with a sound knowledge base of technical analysis. Put in the simplest way technical analysis means using past price data in order to determine future price movements. An example of this is using resistance and support price levels as a signal for price rises and falls in the near future. But let this not fool you – technical analysis goes much further than this.

Stochastics, moving averages, Fibonacci levels and countless other retracement levels are simply formulas based on past price information. Technical analysis encompasses all this which is why it is crucial that a day trader be familiar with them. It is not unusual to see a trading screen with many different representations of the price using different graphs and data – in fact this is why multiple personal screens are so common in the financial world.

If one combines this knowledge with that of fundamental analysis, you potentially have the capability to make brilliantly executed trades. And what is the difference? Fundamental trading is the method of using a companies financial results, combined with economic data and government statistics in order to make an informed and deliberated view of future price movement.

For example, if you have read that the price of gas is rising, and a current publicly traded utility company released very favourable results, this will signal to you to purchase that stock. Conversely, if unemployment was on the rise and average consequence were falling, you might wish to short sell an entertainment index. Fundamental analysis of stocks requires you to develop a good understanding of what you are actually trading, as opposed to technical trading, where you can be looking at any graph (stock, commodity, futures etc) and it wouldn’t matter because you are only concerned with price movement alone.

Clearly, technical trading is designed for swift in and out trades, where a time frame can last anywhere from a few hours to even a few seconds. This is why it is so favourite with day traders. Fundamental analysis on the other hand means taking a position where the timeframe is greater than a day (generally speaking).

So why would an intraday trader be interested in fundamental trading?

Speaking from experience, to be a successful trader means being healthy to read the markets. This is not an simple feat. You need to be healthy to tie up all the knots and read the signals which are being given to you by the market. Thus, having at least a basic grasp of the fundamentals of the market you are trading will become hugely beneficial in making you a superior day trader, and in turn, making superior profits.

Also don’t forget to keep a day trading diary to help you keep track of your winning and losing trades. You need to know what you are doing wrong in order to improve. Examining your trades can be fun – just kick back after a days trading, get a huge cup of hot chocolate, wearing your best all black converse sneakers and read what you did for the day.

In conclusion, I hope you now discern the importance of having a good knowledge of the two main styles of trading, and I encourage you to learn more if you feel you need to. Happy trading.