Understanding Forex Analysis: How to Determine Whether to Buy or Sell in the Marketplace

While many of the barriers to entry that once confined the forex market may have been breached, investors understand the basics of analysis if they are to realize their financial goals.

In the increasingly volatile and changeable forex market, traders must also have access to a range of data if they are to achieve sustainable success. While the rising prominence of forex trading platforms has ensured that investors can easily access vast swathes of information, however, it is important to understand the key analytical tools and how they can benefit you. Forex analysis is one of the key weapons in the modern day trader’s arsenal, as it can be used to determine whether to buy or sell a currency pair during any given time period.

Analyzing a Changeable and Fast-paced Market: How to Succeed

There are two key types of forex analysis, however, one which is based on economic trends and another that uses technical data and subsequent interpretation. Both have their own unique benefits, with online trading platforms such as Think Forex offering investors a unique opportunity to access real-time data and utilize this to further their strategies. With this in mind, let’s consider the following types of analysis and their purpose: –

  • Technical Analysis: Perhaps the most complex form of forex trading, technical analysis is now accessible through a range of software packages and online platforms. With the capacity to evaluate data using a wide range of technical indicators, this type of analysis can evaluate everything from past price movement to historical data. This type of analysis can also be automated in 2014, which removes the human elements of psychology and emotion while creating a strategy based solely on statistics and predetermined economic factors.
  • Fundamental Analysis: Fundamental analysis can be easily overlooked by forex traders, but it can be absolutely crucial during times of global recession or economic hardship. It essentially analyses changes in the forex market, using economic factors such as interest rates, unemployment and gross domestic product (GDP) as its key measuring criteria. Driven by real-time news releases and established trends, it collates global information and allows traders to develop a critical insight into how external factors are influencing the market. When you consider that the forex market is a global entity, fundamental analysis enables traders to create an informed and all-encompassing investment strategy.