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Forex traders use technical analysis in the trading. Here are 5 Benefits of Technical Analysis in Currency Trading.
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Index • Technical Analysis in Currency Trading • 1. Price Movement • 2. Easy to Find Trends • 3. Less Time Consuming • 4. Loads of Informative Data • 5. Easy to Identify Patterns in Forex Market
Technical Analysis in Currency Trading • Technical analysis in the Forex market involves the use of technical indicators and charts to predict the price movements of currency. • Forex traders who use technical analysis in the trading have lauded it as a very useful tool in currency trading.
On the flip side, traders who use the fundamental analysis believe that the technical analysis is a no go zone. • Just like there are two surfaces of the coin, technical analysis has its benefits as well as its limitations.
In this PPT, we are going to expand on the benefits of technical analysis in the Forex Market.
1. Price Movement • Technical analysis focuses typically on the movement of prices of currency in the market. • Charts are used to show how prices are moving; when the prices are trending as well as the strength of those trends.
Oscillators, momentum and volume indicators give a more transparent scenario of the market action. • Using charts, you can obtain the price movements details at a glance.
Unlike in the fundamental analysis where the fundamentalists make use of the economic reports, in the technical analysis, this does not apply. • By analyzing the movement of the prices of currencies in the market, a trader can quickly make a well-calculated buy or sell decision to maximize his margins.
2. Easy to Find Trends • Looking at a moving average, for ex:, a trader can quickly tell whether the price of the currency is trending or just stuck in the range. • Whether the currency is moving up, down or sideways, a chart will easily exhibit the trend.
Trends are most important to technicians because a currency tends to move in the direction of a particular trend. • Using charts, it is easy to establish the trends and make an informed and wise decision in your trading.
3. Less Time Consuming • You do not have to perform the complex mathematical operations when you are using technical analysis in trading of currencies. • The Internet has a rich wealth of various technical indicators that can be used by the trader to make huge profits from the market as well as reliable trades.
Therefore, Technical analysis is less time consuming as compared to the fundamental analysis. It is also less tedious and cost-effective.
4. Loads of Informative Data • Technical indicators and charts provide an array of information within the few moments. • First and foremost, using the technical analysis trends can easily be found volatility, momentum and trading patterns easily and quickly found.
There is a host of indicators in the forex market, and each provides information on the various aspects of currency movement. • This information is of paramount importance to traders to make the substantial and profitable trades.
5. Easy to Identify Patterns in Forex Market • Actions in the market tend to unmistakably and repeat themselves. • Using the charts enables a trader whether newbie or advanced to find patterns that will help him to predict price movements.
Like star constellations, patterns in currency trading can be complex and complicated, but at the time it becomes easier when you master the art. • Some of the patterns that are commonly used in the Forex market are rounding tops and bottoms, double and triple tops, head and shoulders and ascending and descending triangles.
These are proven patterns that the currency prices usually follow. • They have powerful predictive powers in the market.