The Foreign Exchange Market or Forex is the market used when trading currencies, and technical analysis is perhaps the most popular analysis tool (perhaps over and above fundamental analysis). The Foreign Exchange Market is the largest financial market in the world. It is larger than all the bond markets combined. The market is literally open 24 hours a day 5 days a week for trading in large volumes. More than a trillion dollars worth of orders are executed every day on this market. With such a large market, many people have understandably made a fortune by trading on Forex. They have done it by using technical analysis of the patterns in trading and then buying and selling currencies based on such analysis. Anyone can create an income by trading Forex with technical analysis.
There are three reasons why you would want to use technical analysis to trade Forex – simplicity, proven strategy and efficiency. When you evaluate the trading patterns on the Forex market, you will notice that there are trends that appear and are repeatable over time. The goal of analysis is to identify these trends and to spot where we are in the trend. If we are at the start of a rising trend, the technical analysis will have us buy currency. The same technical analysis will tell us to sell the currency when we are reaching the top of the trend.
Trading on Forex can be very daunting for someone starting out. There is a specialized vocabulary that needs to be learned. It is so challenging that most companies offer what is called a “trial account” to let you practice trading without using real money. The purpose of the trial account is to get your feet wet as you learn how to trade.
Once you have started to learn how to trade, you can trade Forex manually but this is very much a labor intensive process and requires you to be able to determine if the market is rising or falling. A better option is to use a computer system that can quickly evaluate the trading patterns every minute of the day for the past week, month, or year. The computer will use technical analysis to evaluate the trends and then present them in easy to understand charts.
There are many different ways that you can use to do technical analysis on the Forex trading patterns. Some of the most common methods are stochastic oscillators, moving averages, momentum oscillators, and Fibonacci retracements. There are other methods that you can use for analysis. As you become a seasoned trader, you need to evaluate which method or method that you want to use. Then you create a trading system that evaluates the trading patterns using these methods. Based on the analysis, you decide when to buy and sell.
The Forex marketplace is a fast paced trading environment. It is the largest financial market in the world and many people have become millionaires trading it. The best way to earn an income in trading Forex is to use analysis to identify trends and then present these trends in easy to understand charts and graphs. Once you have this you can buy and sell currency based on this information. This is an example of how you create an income by trading Forex with technical analysis.