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

Recently, nearly no options trading seminar is without some mention or introduction to technical analysis. In fact, nearly all of the options trading blogs out there in the world wide web use technical analysis as their main basis of decision making. Why is that so? Why is options trading so closely related to technical analysis now?

In order to comprehend the important relationship between technical analysis and options trading, we need to first comprehend what technical analysis does in the first place.

There are two main methods of analysis; Fundamental Analysis and Technical Analysis.

Fundamental analysis is the reading of fundamental data of a company or economy in order to predict and invest in the future performance of the company or market. Such fundamental data includes profit and loss statements, earnings growth and earnings guidance. The problem with fundamental analysis is that great companies do not always make great stocks. Stocks of great companies also experience periods of downturn, often for extended periods of time. As such fundamental analysis helps an investor mostly in deciding what stocks to purchase for the long term (5 to 10 years out), if nothing unpredictable happens to the company in the years down the road. In fact, fundamental analysis is a tool favorable by investors who purchase stocks for their dividends and dividend growth. Read more

Most forex traders around the world will concur with the trading school that thinks about technical analysis as the most precise way of trading the forex market. This trading school bases its confidence on technical trading by considering that all acquirable information on a particular currency pair, along with its influence on the markets and the community of forex traders is already reflected in that particular currency price.

Even if you have barely look at one forex chart, I’m pretty sure that you must have noticed that the forex market moves along clear trends most of the time, and experience has shown us that these patterns tend to repeat with time, a useful characteristic that makes this market specially suitable for technical analysis tools to work at their best.

There is a saying among forex traders stating that those who trade with the trend will have a much higher probability of being profitable at the end of the session than those who haven’t learned how to pinpoint a trend in the charts. Read more