Using Different Forex Analysis in Trading
You may find that you like a little part of different types of analysis that you come across during your trading. You may feel that one of them is not better than the other, and you might find that one has more to offer than the other; it just depends on how you view each of them. You should trade all of your trades based on the type of analysis that you feel the most comfortable and profitable using.
A little review:
Technical Analysis is a study of the price movement on the charts.
Fundamental Analysis is the look into how the economy is doing, or how it is going to be looking in the near future.
Market Sentiment Analysis is what determines whether the market is either a bull or a bear, depending on the current and future fundamental outlook.
Fundamental factors shape the sentiment analysis, while the technical analysis basically helps the visual side of the market with the sentiment which applies the framework for each and every trade that is made.
All three can work together to provide the best trade ideas for the trader. All the figures and base are there, and all that is needed is for you to put them to the test when you make your trades. If you have only one or two, then the trade is shaky, but when you put in all three and you will be good to go with the best trade decision.
In order to become your best at Forex trading, you need to know how to use each of these to become the most effective trader. You shouldn’t just focus on one type of analysis to make a trade, if you see a trade you really enjoy, and think you can make a decent chunk off of it.
If you proceed to purchase this trade, and the trade then goes to a 100 pip move in the other direction because one of the banks went into bankruptcy, this is because everyone else is trading in the other direction, and you’re stuck with the bankrupt. You just lost a lot of money with just that one trade. This is because you did not think about fundamental or sentimental analysis in the process.
Don’t just rely on one analysis to get you through trades. You should learn how to balance all three of them for the best trade. This is the way that you will get the most out of the trades that you make. Of course, trading goes into more depth than what is taught here. You will need to learn more about pivot points, divergences, and Gartley patterns.
Here are some reasons why you should remember to use fundamental and market sentiment analysis together:
- Once you become more involved in trading, mixing the two analyses together will result in better learning and trading skills through the market.
- By using both analyses together, you get a better understanding of all three and how to make the best market trading decisions as you continue to learn more about the Forex market.