Forex Strategies Using Technical Analysis
Technical Analysis is to trading what Fundamental Analysis
is to investing. Anyone who is concerned with making money
over the short term by trading needs to develop a thorough
understanding of technical analysis.
Many investors are used to checking the fundamentals of
stocks and currencies to see where the long-term trend is
headed, so that they can use their money to generate capital
gain and/or income over the long-term. There is nothing
wrong with this particular way of making a steady profit,
provided you have a distant time horizon and are satisfied
with the expected returns.
On the other hand, if you are interested in actively trading
to generate income, the fundamentals are just one small
section of the information that you must consider.
Certainly, traders do well to identify the overall long-term
trend in price, and some traders will only make trades if
they are in the direction of the long-term trend.
However, your Forex trading strategy is bound to include
consideration of technical factors, known as Technical
Analysis, and there are a multitude of indicators that you
can choose that help you determine the sentiment of the
market and other traders at any particular time. The essence
of a Forex trading education is to learn how to view the
signals being given by these indicators and apply them to
Analysis of price fluctuations and movements over a variety
of time periods can give you a good indication of where the
prices will be headed. Some basic analysis includes finding
the support and resistance points that you expect to be
maintained and revisited in future fluctuations. Another
classic consideration is the volatility of a price, as this
will affect how far you should let the trade go against you,
if it initially moves in the wrong direction, and also how
closely you will follow a winning trade with your trailing
Technical indicators are assembled and calculated from
previous price history, and many have been invented and
refined to improve success at predicting the future. In
fact, some indicators have been developed to the point where
they are seen to be a solid accurate precursor of what is to
come. While some are simplistic and easily understandable,
such as moving averages, others require a thorough Forex
trading education to understand their application and uses.
What the moving average cannot tell you directly, for
example, is the market's enthusiasm for a bull or a bear
move. Such information can be seen much more transparently
by looking at developed indicators, such as the stochastics
or Moving Average Convergence Divergence (MACD). These move
to indicate whether the market is overbought or oversold,
and whether they support or deny the actual price movement
is also a significant factor.
There is no doubt that there is a lot to learn, and many of
the basic indicators are available with any charting
packages. You should make sure that any Forex training
online includes full information on the advantages of and
limitations on the use of the common indicators, and
provides examples which will clarify these recommendations.
Mark Soberman of NetPicks LLC has been trading for over 20
yrs and offers free educational resources, live forex and
futures signal services, as well as a new product centered
around training for swing trading in the Forex market.
Mark Soberman of NetPicks LLC has been trading for over 20 yrs and offers
free educational resources, live forex and futures signal services, as well
as a new product centered around training for swing trading in the Forex