How do you know which currencies will rise and which will fall? Over the years, forex traders have developed several methods for figuring out how currencies can move. There are many important skills needed in order to become a successful forex trader; and like all skills, mastering them takes time and practice. So, let’s start with what basic market analysis looks like.
Since currencies trade in a market, you can look at supply and demand. This is called fundamental analysis. Interest rates, economic growth, employment, inflation, and political risk are all factors that can affect supply and demand for currencies.
Price charts tell many stories and most forex traders depend on them in making their trading decisions. Charts can point out trends and important price points where traders can enter or exit the market, if you know how to read them.
An essential part of trading. All traders need to know how to measure their potential risks and rewards and use this to judge entries, exits, and trade size.
The important thing to understand about this type of analysis is that the market is affected by all the traders around the world and what positions they decide to open. In detail, all the information gathered from the previous types of analysis is not always enough when predicting market movements.
Which analysis type is the best?
This is up to each trader’s individual opinion. Whether you will be using just one or a combination of the types of market analysis is something that depends on your preferences. Each and every type is significant in its own way.