A review of the Technical and Fundamental Strategy


The foreign exchange market, also known as Forex market, is now considered the largest financial market in the world for its massive turnover. The forex market is open 24 / 7. Forex is by miles apart from the most liquid market in the world, prices are more representative and are always changing, gradually adjusting to the new circumstances in the world.

In Forex there are two types of analysis:
Technical analysis and fundamental analysis

Technical analysis:


Most small and medium investors in financial markets use technical analysis. This technique comes from the assumption that all information about the market and a series of future fluctuations in a particular currency will reflect in the price of a particular currency. That means you’ve to pay attention to all factors as they all have an effect on the price of the Forex trading.
  • The price reflects all actual market movements. This also includes the demand and supply of currency, political, trade agreements, etc.
  • It is based on market patterns that have worked well in the past. Since these repetitive trends are assumed to repeat itself in the future.
  • History always repeats itself because human psychology rarely changes. Market movements are so predictable.

SOME TECHNICAL INDICATORS:

1. Relative Strength Index:
The index measures the relationship between the upward movements and downward movements and normalizes the calculation so that the index has a value of 0 to 100.
2.Graphics:
Graphics simply reflect market trends. Some of the graphic formations (chartists) include:
  • TRIANGLE
  • BOX
  • DOUBLE HEAD AND SHOULDERS CEILING / FLOOR
  • ASA
3.Gaps:
Gaps or “gaps” are the spaces where there has been no negotiation.
  • A bull GAP is formed when the lowest price of a session is higher than the highest price of the previous season.
  • A Gap Bass Player is formed when the maximum price of the current session is less than the minimum price of last session.

THEORY OF NUMBERS:

Technical analysis uses various theories of numbers:
  • Fibonacci numbers
  • Gann numbers
Stochastic Oscillator:
Used to indicate oversold or overbought conditions on a scale of 0% to 100%.

Fundamental analysis:


Fundamental analysis is the process whereby you analyze the current situation in the country of the currency, including, but not limited to, things as its economy and political situation. Forex Market’s fundamental analyst identifies and measures factors that determine the intrinsic value of a financial instrument, such as general economic and political environment. The fundamental analyst evaluates all these factors before making a decision. All this helps to make long-term decisions that would ensure a consistent massive profit over the short and long period of time.

WHAT ARE THE KEY INDICATORS?

The key indicators include:
1. Gross domestic product:
GDP represents the total value of production of a country during a particular period.
2. Retail:
It is an indicator of total revenue from retail stores.
3. Consumer price index:
The CPI is an index of the prices of a set of consumer products.
4. Business cycle:
Reflecting different stages of the general state of the economy. The phases include:
  • EXPANSION
  • RECESSION BOOM
  • DEPRESSION
5. Monetary policy:
Monetary policy is the control of the monetary system of a country.
To operate the Foreign Exchange Market successfully, you must have knowledge, time and understanding of the whole market. You cannot hit a continuous run of profit in the FX market due to its volatile nature. But a good Forex Strategy would ensure your profits far outweighs your losses. To have any success in the Forex market, you should know how to use both analyses- technical and fundamental- and to apply them in your Forex investments. You should never trade with money you cannot afford to lose.

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