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Understanding Forex Analysis.

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Forex analysis is the practice of examining the changes in currency pair prices and the forces influencing those price changes. It is used by forex traders who buy and sell currencies with the goal of making a profit. Fundamental and technical analysis methods are both used in forex trading, with many traders using a hybrid approach that combines both techniques.

There are several different ways to analyze the FX market in anticipation of trading. Although categories of analysis may be plentiful, traders should keep the analysis simple enough to identify good trading opportunities. here are the three type forex analysis.

1. Fundamental Analysis
Just like we did at the beginning of Forex Trading: The Ultimate Guide, let’s take a glance at the stock market for a minute.
In the stock market, fundamental analysis is the analysis of every factor that can have an important effect on the examined company’s true value.

For example, company management, financial conditions or the overall health of the industry in which the company operates.

Here’s the theory:
A stock is not just a ticker symbol or an electronic blip. It’s an ownership interest in an actual business, with an underlying value that does NOT depend on its share price.

2. Technical

Forex technical analysis involves looking at patterns in price history to determine the higher probability time and place to enter a trade and exit a trade. As a result, technical analysis in forex is one of the most widely used types of analysis.

Since FX is one of the largest and most liquid markets, the movements on a chart from the price action generally gives clues about hidden levels of supply and demand. Other patterned behavior such as which currencies are trending the strongest can be obtained by reviewing the price chart.
Moreover, Technical analysis keeps the trader focused on what the market is doing now, instead of focusing on what the market should be doing based solely on economic circumstances.

It’s because it presumes that all currently available market information is incorporated by the price and has already been reflected via the price action.

Simply put, if the guiding principle in real estate is “location, location, location,” in technical analysis it’s “price, price, price.”
By using different tools of technical analysis simultaneously, you will be able to determine where to enter the Forex market with the highest probability and when and where to get out.

3. Sentiment

Forex sentiment is another widely popular form of analysis. When you see sentiment overwhelmingly positioned to one direction, this means the vast majority of traders are already committed to that position.

Perhaps this can be better explained with an example. Let’s assume that an overwhelming number of traders and investors are bullish the Euro. They think the Euro is going higher. Since people vote with their trades, we can assess through DailyFX (which uses IG Client Sentiment) that the EUR/USD sentiment shows a majority of traders are buyers in the currency pair. You can visit here for more details.


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More traders are participating in the forex market nowadays. There are many pairs to trade in the market. Just be sure to choose a broker that has your favorite pair. However, my broker Eurotrader offers various currency pairs to trade with their traders. Try to use it in the demo account first if you are a new trader.

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Market analyzing is the very important part in forex trading. The trader who has more analyzing capacities he can earn more profits. Therefore if you are a newbie you have to do some works before entering in forex. You must gain enough knowledge and practice in demo account . My broker is FreshForex which provides especial free online training, MT-4 & MT-5 software for practice. However, it also provides 1:2000 leverages, up to 300% bonuses on deposits and order execution within 5 seconds.



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