Trading Methodologies

Fundamental Analysis
A fundamental trading strategy consists of strategic assessments of criteria such as the economic condition of the countries currency, monetary policy, and other elements that are fundamental to economies.

The focus of fundamental analysis lies on the economic, social, and political forces that drive supply and demand. Fundamental analysts look at various macroeconomic indicators such as economic growth rates, interest rates, inflation, and unemployment. One of the downsides of this analysis is that it does not provide specific entry and exit points. Also, the enormous amount of data and news reports generated is difficult for an individual to manage.

Technical Analysis
Probably the most successful and most utilized means of making decisions and analyzing Forex is technical analysis.

Forex technical analysis generally ignores fundamental factors and is applied only to the price action of the market. Forex technical analysis has become the primary tool to successfully analyze and trade shorter-term price movements, as well as to set profit targets and stop loss. It primarily consists of a variety of Forex technical studies, each of which can be interpreted to predict market direction or to generate buy and sell signals.

Because of the impact that fundamentals create, the technical trader (chartist) is always aware of news releases and reports that will effect price action.

Some of the basics are:

  • Analyzing┬áTrends
  • Identifying Support & Resistance
  • Pattern Identification
  • Candlesticks
  • Fibonacci Retracements
  • Indicators

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