Published August 10, 2014 | By admin

It is a well known fact that opportunity does not come every time in every trade.  Sometimes you go long, sometimes you should go short, and sometimes you should simply stand aside.  So, when should you go long in the forex trading process?  When should you go short?  When should you stand aside?  These are the common questions.

There are other factors you should think about, like the methods of analysis and the basic facts.  What are the data that you should consider when you are in to directional analysis?  What are the chart updates that should be considered when doing a directional analysis?

Directional Analysis Is Used For Directional Trading

Directional analysis is used for directional trading.  Directional trading is about making use of open trading positions to make profits from either the upward or downward movements of currency pairs.  This is useful in identifying the currency pair’s price action.  Directional analysis is used to characterize forex trading.  A trader will typically be opening a position before a trend is established, which means before the position of the asset types moves up or down or before the price position is sustained.

Directional Trading Starts off with a Trading Idea

Directional trading starts off with a trading idea.  It is based on a belief system that happens by virtue of the technical and fundamental analysis performed by the investor involved in forex trading.  After the investor has developed a trading idea, they would choose to take short positions in a specific currency and long position in another currency or they might choose to make use of combination trades.  When the value of one currency begins to drop against another currency, then the trader will profit, if the trader chose to go short on the currency that begins to drop before locking the trade.

Directional Trading – Trend Trading

Directional analysis and related trading mostly depends upon fundamental analysis.  This is kind of different from trend trading.  For directional trading, it is important to make some judgment about the economy that issues a specific currency.  However, when using technical analysis for forex trading it is not really necessary to make judgments about the economies of the currency issuing country.

Directional analysis in forex trading can be classed under 4 major subcategories based on the strategies that are being used for the trading process, they are:

• Trend – following strategies
• Break out systems
• Pattern recognition strategies
• Moving average cross over systems