What kind of forex analysis is the best? Here is the question a million dollars.
For each type of forex analysis, throughout his journey as a novice forex trader you will find strong advocates. Do not be fooled by these extremists! One is not better than another, we are all just different ways of looking at the market.
You should trade based on the type of analysis forex which you are feeling more comfortable and light, which is more profitable.
Recalling, technical analysis is the study of price movement and stops, while fundamental analysis looks at how the economy is going.
Sentimental market analysis determines whether the market is high or low in the future or create up current perspectives.
The fundamental factors compound the sense, while technical analysis helps us visualize this feeling and apply a framework for our business.
These three work together in order to help you increase the odds of good operations.
All historical price action and economic values are there, all you have to do is put your thinking and practice these analytical skills.
We will go again to the example of the three-legged stool to emphasize the importance of all three types of forex analysis.
Take one or two legs of the stool and you’ll see what will happen.
To become a true master of forex you need to know how to effectively use these three types of analysis.
Let’s take an example of how to focus on only one type of analysis can turn into a disaster.
– Let’s say you’re looking at your charts and is a good opportunity for negotiation.
You have all that exciting thought that money will rain from the sky.
You say to yourself: ” Wow, I have never seen such a perfect opportunity to trade in GBP / USD. I love my graphics”. Now show me the money!
– You then proceeds to the purchase of GBP / USD with a big smile on his face.
– But wait! Suddenly trade moves 100 pips in the other direction! Few knew, a leading London banks went bankrupt! Suddenly, the feeling of everyone in the market towards Britain turns and make all operations in the opposite direction!
– His smile vanishes and you start to get annoyed with your graphics. You play the computer on the floor and begins to spray it. Just lost a lot of money and now your computer is broken into pieces.
And all because you completely ignored fundamental analysis and sentimental analysis.
Remember when your mother told you as a child that much of anything is not good?
Well, maybe you thought it was just silly at the time, but in forex, the same applies when deciding what kind of analysis we will use.
Do not rely on just one forex analysis.
Instead, you must learn to balance the use of all of them. Only then you can really get the most out of your negotiations.
Meet the three types of forex analysis in our previous article, “three types of forex market analysis” …