Forex Trading Strategies – Part 2

Be warned! There is NO better type. In order to become a real Forex master, you must learn how and when to use both fundamental and technical analyses. If you are not convinced, then here are some examples of situations when focusing on just one type of Forex trading analysis could result in absolute mayhem.

Let us say that you are studying your price charts and you discover a promising trading opportunity. You feel thrilled and get so keyed-up, thinking about all the money that you are going to get. You tell yourself, “Who would have thought this trading opportunity could ever exist or be found. Man, I love my price charts.”

You now go on and proceed with your trade with that smug smile on your face.

Hold on a minute! Suddenly, the trade makes a 20-pip move in the opposite direction! You knew nothing of the fact that an interest rate decrease was implemented for your currency and now guess what – everyone is just trading in the other direction.


Your smug smile turns into a frown and with gritted teeth, you start cursing the charts you once loved. You get into a fit and started throwing and destroying all your nice stuff around. After a while, when you are back to sanity, you realize that you had just destroyed a lot of valuable things you own, which cost you a lot of money to buy. This is all because you totally did not pay even the slightest attention to fundamental analysis.

(Note: These are not based on a true story, as far as I know. These things definitely did NOT happen to me. I might have exaggerated a little, but it could really happen. Do you get the point?)

The key to Forex trading is balance. Your ability to balance the fundamental and technical aspects will determine which way your market will go.

Summary:
There are 2 types of forex trading analyses: Fundamental Analysis and Technical Analysis

Fundamental analysis is done by studying the market through the strength and progress of its economy.

Technical analysis is the study of price movements and actions by reviewing charts.

Technical analysis can help you spot patterns and trends, which can assist you in discovering profitable and lucrative trading opportunities.

To become a master Forex trader, you must always incorporate both fundamental and technical analyses. The key is balance.