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What types of analysis are used in Forex trading
26-11-2017 | No Views : 576
Predicting future prices for currency prices requires studying the different types of analysis. Since Forex trading is based on the future forecast of the price and based on the expectation of the sale or purchase, it needs to be studied.
There are a lot of different tools and types of analysis that help in trading Forex, including but not limited to fundamental analysis and technical analysis, and some only build a strategy trading technical indicators, but we do not support this method as the technical indicators of the price and if successful to give good signals, Do not explain the reasons for price movement.
Types of analysis that help in Forex trading
Forex Trading and Technical AnalysisTechnical Analysis One of the most popular methods used in predicting future price movements in various financial markets, and therefore can be used in Forex trading and determining the entry and exit points of the transaction, it is based on analysis of the data on the chart (Japanese candlestick chart, , The most commonly used chart is the Japanese candlestick chart.
The technical analysis depends on the study of prices during the past period of time and gives a prediction for the coming period, based on the theory that history repeats itself, and frequently used in the extraction of classical models continuity and reflectivity.
When using the technical analysis in Forex trading we first determine the general direction of the price, and then a call to extract the classic price models of continuity or reflectivity, and then combined with technical indicators and Japanese candles to get the best result, and you can integrate technical analysis with other types of analysis, Branch of technical analysis.
Forex trading and liquidity analysis VSALiquidity analysis is one of the most important types of analysis in the financial markets. It is concerned with the volume of trading to give a true view of the movement of supply and demand. If the price movement is a result of supply and demand or because of the intervention of market makers, Trading.
Forex trading and waveform analysisThe most important and most important theory in wave analysis is the Elliott wave theory relative to Ralph Nelson Elliot. He pointed out that the human behavior of traffickers is associated with Fibonacci ratios, especially 61.8%.
In modern times, Robert Prikter is the pioneer of waveform analysis, who has written numerous books and books on detailed waveform analysis.
According to Elliot's theory, the price has a price cycle. The price cycle consists of two waves, a five-wave impulse in the main direction and a three-wave correction wave.
Harmonic trading is also followed by wave analysis, which is also based on Fibonacci ratios for pattern extraction, and is more popular than Elliott waves in Forex trading, because it is easy to draw from the graph compared to Elliott waves.
Forex Trading and Fundamental AnalysisThe basic analysis is also included in Forex trading. It is based mainly on analysis of the economic data of the country and market news. Based on the analysis, the future of the currency is clear. It can be combined with technical analysis or if the trader is not good at the basic analysis, Of the sharp impact on the price movement.
Forex trading and complex analysis typesWe have discussed above the most famous types of analysis used in Forex trading, but there are other types of sophisticated and very complex and have higher success rates in the quality of transactions, including financial engineering based on complex mathematical equations, and trading strategies based on the theory of Game Theory, but this type is complex and used by traders companies Huge investment and hedge funds.
At the end of the lesson we note that it is preferable to incorporate more than one type of analysis, since when more than one type of analysis converges, the probability of a transaction succeeds, for example when a bullish trend appears on a technical analysis with a bullish classical pattern showing a positive harmonic pattern Be a high quality deal.
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