By Bemjamin Stockton – The biggest financial market and most liquid in the world, that’s what the forex market is. You can just imagine the kind of profit earning opportunities it offers. Sadly, as what many new to traders found out, it is not that easy. The forex market is complex; with many factors influencing currency movements that you always have to be alert for developing opportunities and dangerous situations as well. It’s a good thing forex companies and brokers have come up with various tools and software to help you with forex analysis. All traders, veterans and newcomers, rely on effective and efficient forex analysis to earn money from the forex market and avoid getting wiped-out.
What exactly is forex analysis? It’s the process of predicting where currency values will be going in the next minutes, hours or days. You earn money by buying a currency which you think will go up in price in the future and selling when that happens. Seems simple enough but currency values do not usually stay put or go the same direction for long periods of time. Along the way are sharp fluctuations which offer chances of earning but great dangers as well.
There are two kinds of forex analysis – fundamental and technical. Of the two fundamental analysis is perhaps easier but you have to have a firm grasp on the economics of the countries which issue the currencies and the various other factors make currencies fluctuate. Among the Internal factors that determine currency values are economic and political policies, balance of payments, employment, and a host of others. There are also external factors you have to consider. Fundamental analysis helps you have holistic view of the market and if the analysis is correct is a good basis for developing a good trading approach.
Technical analysis is more involved. It is a method of assessing currency values by studying the statistics produced by the trading activities in the forex market like volume and past prices. It is not the intrinsic value of the currency that’s measured, however, but possible movements vis-à-vis other currencies using charts and graphs in the hope of identifying certain patterns from which future trading activities can be based on. This analysis helps you identify favorable entry and exits points, ensuring that you earn money from every trade and avoid losing more than you can afford.
These seem a lot of hard work, but forex brokers are always ready to provide you appropriate forex trainings and even demo trades where you can practice until you have perfected a trading scheme that’s sure to bring in some money.
About the Author
Bemjamin Stockton is a dedicated father and forex tracker. If you want some invaluable advice on forex analysis please visit http://learnforexstrategies.org now.
