In the Forex market, the only constant thing is changes. Changes happen very frequently when forex trading and prices become ultimately unpredictable. But if you successfully predict the price, profits will surely come your way. So, the question is, how can you predict the movement of the market?
Technical analysis is a term you usually hear when trading in the financial market. It is the prediction of the movement of prices out of the analysis of historical price movements in the chart. Charles Dow released the basic principles of technical analysis. It was based on his observation of the stock market.
Linear tools are analysis tools that appear as a set of lines; trend, horizontal and vertical. Vertical lines serve their purpose at the beginning of a trading session and also marks the release of vital news about the market. Horizontal lines, on the other hand, allow traders to draw trend price channels. Trend lines are the one that allows assessment of the current trend.
Indicators are universal tools that help you build various lines, levels, and waves on the currency pair chart. It also helps determine parameters in the market such as market condition, strength of a trend, direction of a trend, and send alerts on upcoming reversals.
If you are looking for the primary tool to use in your technical analysis, then indicators are what you’re looking for. As recommended by professional traders, these indicators are the most effective and the must-haves; Bollinger Bands, Moving Average, MACD, Stochastic Oscillator, and RSI.
Simply called chart patterns, Technical Analysis Patterns are there to supplement and analyze your market analysis. In every currency pairs chart, a certain trend is being followed. Through the help of these patterns, it becomes possible to pinpoint the reversal and the continuation of these trends.
The technical analysis followed ten basic figures namely – Triangle, Double Top, Head and Shoulder, Triple Bottom, Wedge, Triple Top, Flag, Double Bottom, Pennant, and Rounding Bottom.
Trading is hard. There’s no doubt about it. In fact, 80-90 percent turn out to be complete failures in the market. They lose money and they see forex trading as a scam. They spread rumors without realizing their own faults.
Before joining the market, you must be completely prepared to tackle the issues that you are bound to encounter when trading. Continuous education can provide great help, especially for newbies who are yet to have their first profits. The use of demo accounts can also provide a remedy to those who refuse to lose their money even before having their first profit. Demo accounts are the safest way to test your trading strategy as well as your behavior as a trader.
There are a lot of traders nowadays that are too confident after winning their first streak only to end up getting disappointed by the results, worst, losing their capital and having to deposit again just to continue with their positions. As much as possible, don’t get too muddle-minded and stick to your trading plan.