Posts Tagged ‘market analysis’

29.05.2012 Post in Trading

binocTraders analyze Forex market in order to make a forecast that will enable to increase the profitability of transactions. Forecast is the part of a trading plan. Different methods of analysis are used to define long-term trends, favorable conditions for opening and closing of deals, prospect price rebounds etc.

As a rule, there are two main methods of analysis on Forex:

  • fundamental analysis
  • technical analysis

Fundamental analysis is based on the investigation of different economic indicators as interest rates, inflation, business activity indices, employment, GDP. The instruments of the fundamental analysis include news, directly or indirectly connected with world financial markets, economic calendar, various statistical reports, statements of main politicians and even rumors.

Traders that follow this type of analysis must know how to separate the key aspects from secondary ones and find cause-and-effect relations between events. To make the proper use of the fundamental analysis one should be aware of the global economy and financial markets, knowing what factors and what information may affect the price of currencies and securities.

The technical analysis is based on the historical data of prices. The study of previous price changes enables to forecast the future situation. The instruments of the technical analysis are price charts, technical indicators and trade advisors. This type of analysis allows to define trends, support and resistance levels etc.

There are several types of price charts: linear, candlestick, bar. It is possible to place various indicators on charts. Most of them are integrated in trade terminal. Indicators are mainly subdivided into two groups –trend indicators and oscillatory indicators. Trend indicators define the current price tendency, oscillatory ones work better while the sideways movement indicating the oversold and the overbought market.

Also trading advisors enable to automate the trading process partially or completely. These are certain programs aimed at performing operations on Forex without trader’s participation, i.e. that advisors (robots or experts) can make deals basing on the received signals automatically.

To compile the trading forecast many traders combine different types of analysis. It is crucial to keep in mind that the forecast is just the forecast: it may not be justified. Even professional analysts sometimes make mistakes in their analysis as Forex market is not stable. The usage of various methods of analysis is crucial for successful work, but the main task of a trader is to trade in accordance with the market and respond quickly on any changes.

Added by Alexandr Kornilov,
InstaForex Clients’ relationship manager

08.07.2010 Post in Trading

All traders working on the international currency market use analytical reviews and forecasts. This substantial component plays a great role in reaching success and making a permanent profit. As all decisions taken by a trader in the market work must base on some forecasts and researches that is why Forex market forecasts are so necessary for the traders.

Today there is a great many of different sources which provide Forex forecasts as an additional of service. A trader must decide on one of the information resources. But before making your mind who will be your information deliverer on Forex market it is necessary to rely on your market view, as all market forecasts are nothing but somebody’s suppositions concerning the situation expected on the market in the nearest time. A trader must learn well to combine his opinion with the analysts’ opinion who make the forecasts.

Using the analytical forecasts a trader must base on the following rules:

1. A trader must determine the range of sources, from their forecasts he will use the information about the existing processes on Forex market. Nowadays there are a lot of sources on the market which deserve the investors’ attention. The trader can apply to analytical reviews issued by the official resources as well individual traders.

2. Almost all forecasts of Forex market are paid that is why in order to be sure in the received information worth paying attention to the publication popularity. At present, it is rather easy to find it out. You just have to know the public opinion that is actively promoted by thematic forums and blogs.

3. The forecast quality. This assessment criterion can be also easily educed as almost all analytical outlooks are paid and if a trader decides to pay money for Forex market forecast, then the most reliable and competent source must be chosen for this matter.

It would be wrong to say that using the forecasts for Forex market is low efficient. However, even big financial institutes interested in the quality of the provided analytical information do not give a 100% guarantee of a positive result. And none of the financial companies can give, that is why it is better to choose the one which has the biggest and longest work experience on the market.

Added by Evgeny Galaev,
Chief Manager of InstaForex Client Relations Department