Many new traders mistakenly believe that analysis is not a necessary part of trading. More often than not this misconception comes from self-pronounced market mentors who recommend to treat trading like gambling without going into too much detail. There are a number of issues with this approach, but today we are going to focus on the most important one: the problem with ignoring the significance of Forex analysis.
Forex analysis and trading
Let’s begin with the basics. In the Forex market analysis is the system of processing certain information about the currency exchange procedures. Main reason for Forex analysis is to forecast the upcoming changes in the chart and build a trading strategy accordingly. There are two main types of analysis: technical and fundamental. Technical analysis focuses on dry mathematical data such as statistics, trends and sequences. It is performed with the help of various tools such as trading platform indicators. Moreover, the technical analysis can be also executed by an automated trading software due to its purely numerical nature.
On the other hand, the fundamental analysis is based on political, economical and social events in the world. It comes as no surprise that things like elections or protests are able to cause an effect on the currency in the related country. For example, the Brexit is still shaking up the currency trading community. It is also pretty obvious that fundamental analysis requires a certain level of knowledge and experience as well as it cannot be automated. However, for the traders who tend to use strategies that involve trading on news there are multiple sources of the needed information. For instance, you can always sign up for the updates in a daily Forex analysis and be in the know on all major changes for your preferred currencies.
So, as you can see on your own, Forex analysis and trading always go together. Disregarding the importance of analyzing the market before making a decision is like going on an airplane without knowing its destination. Successful Forex trading comes from deep understanding and careful strategic planning. Now, in order to master the implementation of analysis data in your day to day trades you need to first decide on a few things. Specifically: what is your trading budget, what strategies are you planning to use and how much knowledge do you have on currency trading in general. Once you are set on those you can move on to selecting the proper tools for your Forex analysis.
Forex analysis app
As you might know by now Forex analysis is an extremely complex matter due to the variety of its forms and methods. And even though you won’t be able to find a couple of pages long step by step Forex analysis and trading PDF, this should not overwhelm you since there are so many other tools you could effectively utilize. For starters, there are numerous apps that assist their users with technical analysis for a fixed fee. A very straightforward benefit of any good Forex analysis app is convenience: it is simple to operate and read and you can gain access to it at any point by using your smartphone. But it also fair to mention, that the capacity of most apps will not be able to provide you with a full picture. This means if you decide to use a Forex analysis app you should get a clear picture of what the end result should be like in order to achieve satisfactory outcome.
If you are a hands on trader and like to run your own analysis, a very efficient tool for your needs is Forex analysis Excel software. Spreadsheets proved themselves as extremely handy when it comes to storing a great amount of data. Not only is it a great way of systemizing information, it is also a convenient solution for retrieving the necessary info from the thousands of cells in a matter of seconds as well as a very simple to use calculator of many variables. The trader can choose to purchase the preset software addon or work out their own way of using spreadsheets to organize the information and gather statistics. Either way, when it comes to Forex analysis Excel is definitely a tool to consider.
Another piece of advice is for the traders who are not confident with drawing their own analysis results and prefer to trust the task to an automated trading program. Using automated trading software is a solid solution for anyone who lacks either confidence or time to trade on their own. But you should always keep in mind that the key to success in such situation is to find the software that will be right for you specifically. One of the things to consider is what currency pair works best for the chosen software. Because although the automated programs operate on similar algorithms, the past showed that some of them display different rates of performance for different currencies. For the user it simply means that they should be familiar with the technicalities of the preferred pair in order to be able to correct the automated software when needed. Similarly, Forex analysis EUR USD pair will be different from the GBP CAD, so understanding the character of your currencies can play a great role in the trading success.