Ways to analyze the Financial Markets of Forex Trading Money




There are two main ways to analyze the financial markets:

Fundamental analysis – Based on movement caused by news or events and economic performance.

The Technical Analysis – Using historical prices to predict future movements, mainly with the help of the use and study of graphic elements.

The validity of each of these systems has been a frequent point of debate among analysts of different markets financial markets.

In the Forex currency market studies concluded that fundamental analysis was more effective in predicting long-term trends (over one year), while technical analysis was more appropriate for shorter time periods (0 -90 days). For periods of between 3 months and one year it was suggested that the combination of both approaches was the best.

It is important to consider both strategies, as fundamental analysis can explain the movement of technical analysis such as breaks or reversal of trends. Technical analysis can explain the fundamental analysis, especially in quiet markets, which causes resistance trends or movements unexplained.

Thus, operators with a technical inclination attention at meetings of the central bank, taking into account reports on employment and pay attention to the latest figures for inflation. Similarly, operators are inclined toward fundamental analysis often try to calculate the levels of support above and below, and determine the percentage of training setback.

The fundamental and technical factors are undeniably essential in determining the exchange rate dynamics. However, there are two additional factors that are crucial to understand the short-term movements in the market. These are the expectations and feelings.

Expectations are formed before the publication of economic and financial data. Paying attention only to the published figures is not enough to capture the future of a currency.

However, expectations can be replaced by market sentiment. This is the predominant attitude of the market for a type of change, which could be a result of economic calculation total for the country concerned.

A currency can go up against another because investors think they will rise in the future, or because they think they will fall down.

From the interpretation of economic data from the environment and of its own currency, and the combination of rational and intuitive findings, investors are starting their own expectations.

And what investors do is try to anticipate the market, neither more nor less. If the market thought the same things they would not exist a path in prices, because they incorporate the expectations above, and there would be no profit margin.

The question, then, is to win the market by anticipating it. You have to read the signs of the environment, and financial market itself rather than to read others, and we must succeed in the direction of future changes.

But, who acts and intervenes in the market? Are all investors equal? No. There are large institutional investors, and there are small private investors. The first move large sums of money, tend to invest long term and move mainly based on the analysis of changes in economic fundamentals (the data), and less subjective impressions or emotions, though these are. They are the ones that really affect prices. Small investors tend to invest in a more emotional and with a short-term horizon, and its influence on prices is naturally lower.

Ie, it is mainly the reason that drives prices in the long term.

A little more depth, based on what they decide their investments in the forex retail investor? What is clear is that they are not able to calculate intrinsic values of companies listed. Only the big investors, analysts and professional wealth of information on both technical and fundamental, can calculate the intrinsic value of a currency.

Private investors are mostly speculating with the price, and acting on intuition. Can not estimate the value but estimated future contributions or sense of the value of the currency.

What part of small private investors? The advice of the professionals, more or less stereotyped, and general economic information, which performs better or worse. With this pattern of setting their own performance, and manage their operations. / P>

They tend to let go with the more or less general opinion, but always assume that they are better informed than others. It is the essence of the investment process, which requires that we anticipate others, and hit in the right direction, making the presumption that provides better information than others. Or they know better than to interpret the others.

Dream Operator

In the world of investments must be at times cold-blooded and know how to accept mistakes and learn from them, but it is important to clear a clear ideas of what our goal and purpose is not never getting carried away by a feeling or lucky because we have our investment at stake.

Consider your investment:

We must never allow our investments to luck or a simple feeling, always analyze the operations to be undertaken, to explore all possibilities and make an analysis before deciding.

An average buyer thinks several times before they spend $ 500 on an object, many traders open operations with larger quantities with only a present, do not leave anything to chance make sure your investment is to study and put the respective “stop lose “and” limit “for each operation.
Leave your earnings to continue:

This simple concept is one of the most difficult to implement and is the cause of the failure of many operators. Most operators break your original plan and withdraw their earnings prior to reaching the goal of profit because they do not feel comfortable to stay in a profitable position. These same people will easily hold positions that generate losses, allowing the market moves against him by hundreds of points in the hope that the market is tipping in its favor. In addition, operators whose stop orders have been played several times and saw how the market will turn in their favor once they had left the operation, the orders tend to draw stops its operations believe that this will always be the case. ¡Stop orders are there for the market to touch them and to prevent you to lose more money than a predetermined amount! The erroneous belief is that any transaction will generate profit. If 3 out of 6 are running profitable operations, then you’re doing well. So how make money if only half of their operations are successful? Simply allow your profits on the successful operations continue and keep losses to a minimum.

Do not marry their operations:

Why operate with a plan is the No. 1 tip is because most of the analysis is done prior to running the operation. Once the operator is in a position tends to analyze the market in a different way with the “hope” that the market will move in a positive direction rather than objectively observe the changing factors that may have turned against their original analysis. This is particularly true for losses. Operators with a losing position tend to marry their positions, which makes them neglect the fact that all signs point to continued losses.

Do not bet your house:

Do not operate too. One of the most common mistakes is to discuss the operators to leverage their accounts too much money to operate well above those that prudently should operate. The leverage is a double-edged sword.

Just because one lot (100,000 units) of currency required $ 1,000 as a minimum margin deposit, it does not mean that a trader with $ 5,000 in your account can negotiate 5 lots. One lot equals $ 100,000 and should be treated as an investment of $ 100,000 and not the $ 1,000 margin. Most traders analyze the charts correctly and place sensible operations, but tend to over-leverage. As a result, often are forced to exit a position at the wrong time. A good rule of thumb is to operate with 1-10 leverage or never use more than 10% of your account at any time. Trading foreign currencies is not easy (if it were, everyone would be millionaires!)