|
Below, you'll find extensive information on leading
chart fx internet articles and products to help you on your way
to success.
What Is Forex Technical Trading?
By Kent Douglas
Just as you would expect with anyone trading in equities, investors in the market employ strategies to help them invest more successfully. All of these strategies ultimately boil down to one thing: trying to predict which way the currency exchange rates will fluctuate. Predict correctly, up or down, and make a profit while we all know what happens when we are incorrect.
When deciding whether or not to enter or exit a position in the market, there are two basic types of analysis from which to choose: fundamental or technical. Investors who base decisions on fundamental analysis will look at interest rates and the overall economic performance of the nations in the currency pair when deciding when to sell and buy positions. Technical investors will look to trade based on price performance and chart patterns—so which is best?
Use of fundamental analysis such as the latest GDP figures may seem like a very logical approach when deciding when to buy or sell a position in the market. After all, we all know that stock prices are affected by economic data so it would stand to reason that the same would hold true for the Forex. However, the market has no central exchange with set hours so trading continues 24 hours per day except when shut down between Friday and Sunday and this makes a big difference between profitability and loss for small investors.
The small investor is a very, very, very small fish in a gigantic ocean full of larger investors. By the time economic data and current events filter down to the small investor, all of the big players have already moved their currency and taken advantage of the information. Day trading is a very dangerous game in the because the market is so fluid and investors are highly leveraged so using fundamental analysis is a very dangerous strategy.
Technical trading, however, involves the use of historical data to interpret present pricing trends and predict
Become Six Sigma Certified - Sponsored Link
Ad - www.VillanovaU.com/SixSigma Jan 6 2009 7:26PM GMT
Obama: 'Trillion-Dollar Deficits For Years'
US News Jan 6 2009 7:26PM GMT
Global seafood trade plunges due to wild currency fluctuations, with opportunities and pitfalls for
Seafood.com News Jan 6 2009 7:24PM GMT
Gold Rises First Day In Three As Dollar Weakens
FOXBusiness.com Jan 6 2009 7:22PM GMT
Dollar mixed after FOMC minutes reveal concern about risks
MarketWatch Jan 6 2009 7:18PM GMT
Dollar pares gains versus euro on Fed minutes
Reuters Jan 6 2009 7:18PM GMT
Obama says trillion-dollar deficits may last years
Washington Post Jan 6 2009 7:17PM GMT
the future. The moving average (MA) is the most common technical statistic used by investors. Presented in a graph or chart format, the moving average helps investors see the price movements of a currency pair for a given period of time. A 10-day MA, for instance, will show an investor the daily open, daily close, high, low, and overall direction of a currency pair for a 10-day period of time. It is called a moving average and favored by investors because it helps smooth out the noise of the price movements so an overall trend can be determined.
Technical trading involves entering or exiting a position based upon predetermined points by the investor. For instance, some investors may favor a 50-day moving average (the larger the sample, the smoother the lines and the easier it will be to see a pattern) and will only buy once the price moves above a certain point on the chart. Other variations on this statistic include:
•Simple Moving Average (SMA)—is based upon the closing price
•Exponential Moving Average (EMA)—assigns more weight to recent prices while lowering the importance of days further in the past
In the end, the technical traders are trying to identify trends and then capitalize upon them. The goal is to find the currency pair with the greatest pip movement and lowest volatility. Technical analysis helps investors determine the emergence of new trends in currency pairs so that they can profit from them but no strategy will work with 100% accuracy because at the end of the day—the market is always right even when we believe our analysis is perfect! Article by Kent Douglas, author of "The Simple Solution: The Easiest Currency Trading System Anywhere." To learn how you too can succeed in and Currency Trading, please visit www.SimpleForexSolution.com
|
