This article looks at the different types of analysis available on the foreign exchange Melbourne market, and skills required for charting.
In order to be successful on the foreign exchange market, you must gain an understanding of its features. In addition to trading strategies, you must be aware of the different currencies and market trading sessions. There are two different types of analysis that must be studied and understood in order to trade effectively. These are fundamental and technical analysis and are discussed below. While many traders choose to follow one method of analysis exclusively, there are those who combine the two in order to gain a more integrated perspective of the foreign exchange Melbourne market.
Fundamental analysis is more abstract than technical analysis using global forex news to determine future market movements. It is essential that a forex trader keep up to date with all economic and political news as these events can impact on the foreign currency market. The trading tool used in fundamental analysis is known as a forex calendar. The calendar is highly beneficial as it sifts through the news releases identifying the relevant information. It also lists the information from high impact to low impact items. Without a forex calendar, a trader will find trading on forex news highly time-consuming.
The more well-known and frequently used type of forex analysis is technical analysis. This method is more practical than the fundamental method and utilises factual calculations to determine future market movements. Traders using technical analysis will interpret historic and current charts in order to determine patterns in the foreign exchange Melbourne market movements. It is believed that the market will repeat these patterns, and thus a prediction of trends can be made. The most common trading tools used are forex charts and forex signals.
The technical/fundamental analysis combination
Many effective traders will agree that the most successful form of analysis is a technical/fundamental combination. These traders are known as technimental traders because of the combined method. This mixture allows the trader to identify accurate entry and exit points in a trade using technical analysis signals, and predict potential movements of the market during the trade based on forex news releases.
Forex charting on the foreign exchange Melbourne market
When you have determined what type of analysis you will be using, you must gain an awareness of charting and the aspects thereof. Forex charting is the use of different tools to create indicators for entering the foreign exchange Melbourne market. Contrary to popular belief, the most important aspect of charting is not a technical skill but rather the discipline to use charts.
In order to use a charting technique successfully you must be disciplined enough to not diverge from the indicators displayed. It is easy to remain disciplined when encountering the first indicator; however, you must maintain that psychological mind state when facing the other indicators. If you do not, and you diverge from the trading plan, you will encounter detrimental losses.
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