3 Types of Forex Market Analysis
The three most important types of Forex market analysis are:
Fundamental Analysis:
This is the analysis of social, economic and political factors that affect a currency’s supply and demand. There is a small group of Forex traders who rely only on fundamental analysis, and believe that all the market is driven by the daily released economic data and economy.
Technical Analysis:
This is the study of the price and volume movement by looking at the price chart and using mathematics to project a currency’s next price movement. The majority of Forex traders utilize this analysis in combination with analyzing the fundamental data.
Sentiment Analysis:
Apart from the mini and microanalysis of data, this is the analysis of the mindsets and sentiments of an individual. The traders have their own opinion of why the market is behaving the way it does and whether to trade in the direction of the market or go against it. They come with their own thoughts and opinions on the market. This further helps to determine the overall sentiment of the market, regardless of what information is out there.
Which Type of Forex Market Analysis Should You Choose?
It depends on the experience and what resonates with you as a trader. However, the experienced traders prefer to use a combination of all three to boost their portfolio. Since, each of the analysis technique will provide you more information and new insights about the Forex pair you are trading. In the upcoming lessons, we will take a closer look at the two most used Forex market analyses methods; Fundamental analysis and Technical analysis. We will dive into the specifics and show you how to become proficient in these areas, in order to become a trader that makes better trade decisions.
