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Understanding of Forex Part III

The third part of my topic “Understanding of Forex” is now being presenting.

As in my previous post I mentioned that there are two basis of forex trading:

Forex Trading on Technical analysis basis

Forex Trading on Fundamental analysis basis

We will discuss in this post about first one. A phrase commonly  used that “History repeats itself”. This is the basic principle of technical analysis. This is historical study of price movement over a period of time to determine the probabilities of future movement of the market. Technical analysis indicate that where and when to enter to market and when and where to exit from market. The technical analysis are used for tow objective mainly.

Identifying Trend

Identifying support and resistance.

<a href="https://www.fxpremiere.com/the-most-popular-indicators-used-in-forex/" target="_blank" rel="noopener">Source</a>

The market movement can be of three types;  goes up, goes down and sideways. Price of any pair is move in zigzag style. So the price remain in two states either it move with in a range or moving zigzag up or downwards.

How can you use technical analysis?

Technical analysis is based on the theory that the markets are confused (no one knows for sure what will happen next), but at the same time, price action is not entirely unsystematic. In other words, mathematical Chaos Theory proves that within a state of chaos there are certain patterns that lean to repeat.

This type of chaotic actions is experimental in nature in the form of weather forecasts. For example, most traders will acknowledge that there are no certainties when it comes to predicting accurate price movements. As a result, successful trading is not about being right or wrong: it’s all about determining probabilities and taking trades when the odds are in your favor.

<a href="https://www.accuwebhosting.com/blog/speed-profits-understanding-vps-works-forex-trading/" target="_blank" rel="noopener">Source</a>

Remember, there is no miraculous combination of technical indicators that will open some sort of covert trading strategy. The secret of successful trading is excellent risk managing, control, and the ability to be in command of your emotions. Anyone can guess right and win every once in a while, but without risk management it is practically impossible to stay profitable over time.

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Written by Shahqais

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