As forex trading has become more and more popular on the internet it is only reasonable that forex analysis has become a widespread term similar to any other form of trading. In forex currency trading and all other products that belong to the portfolio of instruments offered at our trading terminal there are a number of behaviors and patterns of trading practices that come from different types of traders which posses different temperament, different psychology and different tolerance limits. Some traders prefer to trade based on what they read on the daily news, some prefer to trade based on what they have been taught in college, some traders prefer to scalp a trading strategy after analyzing trends where others simply trade based on their gut feeling. The various types of forex analysis belong to 4 main categories which each posses different characteristics and address different type of traders. In this section we thoroughly explain forex technical analysis, forex fundamental analysis, trading psychology and the practice of trading the forex news. Whichever category you might think you match better take the time and read through the comments and the explanations addressed by our editors which are experienced traders themselves.

Forex Technical Analysis

The first category we will be discussing is traders and overall trading based on technical analysis. Forex technical analysis or simply technical analysis as it often abbreviated is a form of analysis that bases future speculations on price history movements of the past. Out of the variations of methods used for technical analysis the most widespread method amongst traders is using technical indicators. In this case calculations are used to produce technical Indicators, usually displayed as graphs, which provide traders with pertinent information. One well known example is the MACD (Moving Average Convergence Divergence) which calculates a moving average price within specified time periods. In this type of trading most traders will also look at support and resistance lines which show the values a price is typically moving between and gives an indication of how and when a price is likely to change.

As you can understand the overall idea is reviewing chart history and identifying patterns of behaviors; in most cases a currency pair, a future or a commodity will follow its movements in a form of a pattern which is what traders engaging in forex trading based on their conclusions will capitalize on in an attempt to capitalize and occur profits from their trades by speculating on a possible change in mood based on historical facts. Traders commonly use trend lines to seek a peak and a low and distinguish where the price of a currency pair or any other instrument will bounce and occur a change in direction.

Technical analysis is a respectable form of analyzing the market but as you can understand it requires patience and of course time which is why it cannot be considered a good match for all types of traders. Moreover as a trader you should understand that each individual has a different perspective on what he makes of technical analysis as each trader possesses different knowledge and different expertise. The practice can overall be considered as a respected way of supporting trading decisions but we cannot define it as a formal practice of making trading decisions. If you are a new trader and your at the first step of the process of experimenting with forex technical analysis we should note that as traders ourselves we have often experienced cases where novices are influenced by a friend or an advertisement to use tools to sharpen their forex technical analysis.

We cannot directly criticize tools available online and we cannot directly say that one tool might be worth using and another may not as most technical analysis tools are quite nice and easy to use; however as you can understand these tools are open for any trader just like yourself to purchase and make use of which basically means that the conclusions you will be able to draw when using them will be quite similar to the conclusions a number of other traders across the world will come to therefore meaning that they cant be considered as accurate if a number of traders are acting in the same direction and therefore influencing the market to bounce or react in the opposite direction.

As far as using them we surely do not discourage any trader to use them as an aid but we do stress that they should not be taken for granted as a trading guide because their wide circulation and usage causes them to influence the market to deviate in many cases as the same signals you can be receiving have just popped up on many, many computer screens across the world. As traders we applaud fellow traders that take the time and research trends and patterns and make their own conclusions without being heavily influenced by software programs which can be costly to buy and moreover turn costly to your trades.

Forex Fundamental Analysis

Another form of forex analysis is what we call fundamental analysis or analysis based on economic indicators. This type of market analysis refers to the practice of comparing reports from countries in regards to interest rates, unemployment, consumer price index, GDP, trade balances and other key economic indicators which influence the market and subsequently the forex trading prices of a particular currency or basket of currencies to move to move up and down on a day to day basis.

Traders that engage in fundamental analysis in their majority attempt to speculate the outcome of reports that are to be announced in an effort to buy a currency at a lower level and sell after the report hits the headlines or vice versa. Although you might think that this is a neat strategy and once that can be applied by many traders you should take into consideration that in many cases it wont matter if the outcome of a report is what it is expected to be as the flocking of traders towards once direction can be a factor itself in influencing the market itself.

Summing up beginner traders should understand that the basic key to approaching forex analysis from the fundamental point of view is first of all understanding the markets and moreover understanding what influences the markets. Above we have referred to economic indicators and they are what you should first understand and comprehend before you even come near understanding forex fundamental analysis. The key economic indicators which we consider as influential to the forex market are presented below; these will be the key factors that will allow a trader interpret how healthy a regional economy is and therefore determine the volatility of the region to currency deviations during social, economic and political changes across the five continents.

Major Economic Indicators

Whichever category of trader you might belong to you will soon realize that forex analysis is something you will do either in a bigger or a smaller scale; selecting which type of trading analysis you wish to proceed with is something that can only prove to be both effective and efficient for you over time. Trading in the forex market without a real strategy is risky and involves a risk of loss of capital so we would recommend that you capitalize on the opportunity to issue a forex demo account and practice before proceeding with a real account. You will have the opportunity to simulate trading psychology regardless of your forex analysis and you will learn to allow trading psychology affect your trading decisions as little as possible by eliminating greed and quick decisions.