Welcome to Forex Trading Resource Center
Forex School Trading Article
This is a selection made from among articles on Forex School Trading. For a permanent link to this article, or to bookmark it for future reading, click here.
FOREX MARKET FORECASTS
from:Melissa Frankel
It’s not an easy task to forecast the forex markets, but it’s what thousands of forex traders and brokers do every day, with varying degrees of success. Like forecasting the weather, predicting the forex markets is sometimes like throwing dice, sometimes a guessing game, but always an adventure.
There are basically two philosophies underlying how forex markets are forecast, namely, technical analysis and fundamental analysis. We’ll look at each of them below.
The technical approach examines past market actions and uses that data to predict the future. Previous trends in most areas of life are almost always good indicators of the future and forex is no different. People have not changed much in the decades since the forex market was created. They still buy and sell and react to stimuli in much the same way as they did 50 years ago.
Since forex rates change dynamically throughout the trading day, looking at all the years of past data can be a daunting exercise. Smart analysts have learned to look at the bigger picture and concentrate their efforts on trends over a longer time frame.
Using fundamental analysis to forecast forex markets is a more in-depth approach, but it can also be highly accurate. Basically, what fundamental analysis is about is
forecasting the market based on external factors such as political moves, government involvement, social movements, even the weather (in some cases the weather can be crucial to seasonal crops). Someone good at fundamental analysis might forecast forex drop-offs because he knows a country’s government is unstable, or increases because the country has just elected a popular new leader. Anything that can affect a nation’s economy can affect the exchange rates, and that’s what a fundamental analyst uses to determine the future direction of the forex market.
Naturally, this means having in-depth kinowledge on particular countries or regions, which is hard to do for more than a few countries at a time. (It becomes even more complicated when trying to forecast the Euro since various countries are locked into that currency.) But having that kind of intimate knowledge makes it much easier to forecast forex trends.
Experienced traders have learned to use a mix of both fundamental and technical analysis in their forecasting. For example, a trader might see that a country is currently facing a particularly strong hurricane season (fundamental) and knows from past records that strong hurricane seasons have meant a weaker economy for that country (technical). Thus, he can predict with some degree of confidence down-turns for that country.
 |
 |
Warning: file(http://www.searchfeed.com/rd/feed/TextFeed.jsp?trackID=&pID=55224&cat=forex+school+trading&nl=5&page=1&excID=) [function.file]: failed to open stream: HTTP request failed! HTTP/1.1 404 Not Found
in /home/fst4fore/public_html/forextrading/datas/searchfeed.php on line 8
Forex School Trading Specific links
Forex School Trading News
No relevant info was found on this topic.