If you’ve already made the decision to
dive right into forex, then you’re in good company. Everyday thousands
upon thousands of traders make the decision to jump into the world’s
biggest financial market. Will you be one of them? That’s up to you, but
there are some things that you will need to know in order to really
have control over your financial future.
You will need to be able to study data
in a way that allows you to make decisions. This is naturally called
analysis, but you might be surprised how many new forex traders think
that they don’t need it. You want to always make sure that you think
about the bigger picture no matter what you do. Forex trading is going
to be a lot of research. Would you want to put your clothes on in the
dark and make an important business speech to highly influential people?
No, not at all. You would want to do as much planning as you possibly
could.
So let’s go over the main types of analysis used in the forex market world.
The big three types of market analysis
are technical analysis, fundamental analysis, and sentiment analysis.
While you can Google this on your own and find lively debates on which
one is the best, the reality is that you’re going to need all three in
order to be a consistent forex trader.
The one that you will probably rely on
time after time would have to be technical analysis. This is the
framework where traders look at price movement over time in order to
figure out where the market is going, or where to invest next. There is a
lot of important information that can be gleaned from the past, and you
would be wise to remember that. There are numerous forex rumors that
talk about what price things will reach and what have you, but is that
really true? Technical analysis can give you the scoop before anything
else.
There’s also fundamental analysis, which
is basically looking at the economic, social, and political issues that
can affect the marketplace. You will want to definitely look at
fundamental analysis through reading the financial section of most
newspapers, but you also want to make sure that you study current
events. If you hated this subject in high school, you’ll hate it again
in forex — only worse now, because it’s gotten so important.
There’s also sentiment analysis, which
is basically a look at how people feel about the market as a whole. This
is going to be how bullish or bearish the market is, which can be used
to determine YOUR next moves.
As mentioned before, there is a lot that
goes into forex, but it really all starts with analysis. The better you
get at analysis, the easier it will be to avoid the same old problems
creeping up on you as you listen to just about everyone and their
grandmother telling you what to do in forex. The more you can focus, the
more money you will make over time!