Forex Trading Analysis and Methodology

The main trading methodology used by both retail traders and institutional traders is Forex trading analysis, both Fundamental Analysis and Technical Analysis. These are used to try and predict the market where it is heading.

Fundamental Analysis

This type of Forex trading analysis represents what is going on in a country. How healthy is the economy, GDP, employment data, oil reserves and much more that would affect the local economy of that particular country in caption. Fundamental Analysis could be used by both the institutional trader and the retail trader as this is mostly the main trading news that you would find in a lot of websites on the market. You would be able to review what news are expected to be and of course how would the news affect the currency pair. This is not always the case of course but usually news can make markets move from 20 to hundreds of pips. Depending on the type of news and how positive or negative this would be. This is a very important type of Forex trading analysis.

Technical Analysis

History repeats itself they say. This is what in principle traders do when they consider technical analysis as the form of Forex trading analysis to opening positions. Main trading points, possible important support and resistance points, long term patterns and historical data would help the trader to decide on how is most likely to trend the future. This is closer to a prediction system of course but usually this could be very accurate as the price does have sensible areas and an experienced trader could exploit these reaction points to collect some pips with their Forex trading analysis.
Some institutional and possibly experienced retail traders too would use technical analysis on the long term too, positions that of course could lead to take days or even weeks to develop but would also get hundreds of pips rather than an intraday position.
Whichever from the 2 Forex trading analysis methodologies you might add to your trading plan make sure to understand well the implications of the information you have in hand. Not all information of course will make the market move in the same way so do not just immediately trade any of the above. Always demo trade any new addition to your trading plan and shift any new system to your live account only when the results are stable and you have enough track record to be able to have a clear and stable picture of the market moves and options. As always caution when trading people.