The currency market is growing tremendously and has become a favorite spot for people to start investing. The reason behind the huge growth in the currency trading market is due to its liquidity that runs into trillions of dollars daily and also the ease of accessibility (as you can start trading with as little as $100).
A newbie forex trader is helpless unless he subjects himself to rigorous research and training, some of which he gets on the internet for free or sometimes paid. To kick start your trading experience, an investor is expected to first analyze the market trends and get the software that suits his trading style as well as a suitable forex trading model that can be trusted.
To be able to do this effectively, investors either analyze the market via fundamental methods or technical methods. The aim of both analysis is to get in depth study of market but the methods are varying. In being able to determine which forex trading model is more suitable, we'll discuss on both category in detail:
Technical analysis does not try to determine why we have price rise and falls. What it does is concentrate on price action rather than being concerned with the reason behind the price.
Technical analysis is only concerned with analyzing the spaces between trading prices and gaps between prices. Historical price action is what the technical trader's looks out for as he seeks to explore his trading opportunities with this.
Fundamental analysis is a must look-out for any newbie as well as advanced traders. Some investors maintain that one should still have a firm knowledge of fundamental analysis even after the period of learning how to trade.
Fundamental analysis is not fixed, as it's based on factors like social, political, economic and financial indices that affect the market. There's no exact forex trading model for fundamental analysis, various professionals prefer applying various models and the results differs based on loses or gains that are experienced.
Although fundamental analysis isn't that easy, it is advisable that traders carefully view attest news and market data.
Proponents of fundamental analysis would argue that fundamental factors such as interest rate statements, GDP, Sales and employment statistics, etc, are indices that drive the forex market and due to this they are of the opinion that only trusted forex trading alerts based on these triggers can be relied on.
A handful argues that technical analysis is about looking at historic data and imagining how from out of chaos the market could be predicted accurately.
Knowing which is better is a very tough call and forex traders would always say that a good blend of both is always best. Either would yield a very reliable forex trading signal. The type of forex trading model will depend on the kind of forex market research you want to utilize.
The two types, naturally, are fundamental analysis, which is structured around monetary performance indicators; and technical analysis, which depends upon charts and statistical indicators.
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