I don’t want to bother you with too many technical jargons as to what forex is all about. Just take it that forex is an online foreign exchange where one country currency is exchange for another. The whole process of doing this forex results in business where forex trader make money while doing the business of exchange, unlike offline foreign exchange where it is possible for a currency exchanger to determine how much he will buy and sell at a given point in time, online forex is subject to powerful market fluctuations.
Therefore, for forex trader to make money in the online forex market he must understand the basic know how of trading or market analysis to be able to make entry or exit. Appropriate understanding of when to buy and sell based on the market analysis will go a long way to determine the success of a forex trader. To this extent, there are two types of trading based on the analysis you can make when approaching market. These are fundamental Analysis and Technical Analysis
I shall endeavor to explain these later but before I explain these two terms I need to let you know that there is a serious debate as to which one is the best type of trading, some believe that fundamental analysis is the best while other believe it is Technical analysis. My submission however, is that for you to make it big in the forex market. You need to know a little bit of both analyses to be able to capture big pips – pardon me for that terminology – in the forex market.
Having said this, what then is Fundamental analysis and Technical analysis? Fundamental analysis is a way of looking at the market through economic social and political happenings in a country which affect demand and supply conditions. What this simply means is that how economy is doing will determine the strengths of their currency. If a country economy is strong or is doing well, there is a presumption that such country currency will be strong and therefore, the best deal in the forex market will be to buy that currency and vise versa.
Technical Analysis on the other hand makes use of charts which are based on the study of price movement. The underlying principle behinds technical analysis is that an individual will look at the historical price movement and base on this predict the future price behavior of currency in the forex market it is believed that the price movement forms trends and patterns which are highly predictable.
In a nutshell, Forex trading is not the same things as gambling, for you to therefore, succeed in forex market, you need to understand both technical and fundamental analysis and be able to apply them to your live trading. If you truly want to make it in forex market, you don’t need to gamble and if you need to gamble please don’t hesitate to go to casino. Remember that too much of everything is bad. Excessive dependence on any of the two analysis is bad. Make sure you learn how to balance the use of the two types of trade analysis and I assure you that by so doing you shall really get the most out of your trading.