Forex Trading Technical Analysis – Simple Tips to Make Money!
There are basically two ways to analyze the Forex market. The fundamental analysis and the technical analysis: The fundamental analysis focus on economic indicators that moves the currency of any particular country. Economic indicators like employment rate, import and export, gross domestic product, etc.
While the technical analysis bases their own analysis on historic data, by looking at charts and using technical indicators they are able to spot profitable trades in the market daily. There is a constant debate as to which analysis is better of the two, but i would say you have to know a little bit of both, but more traders are opting for technical analysis. So the question is how do you make money with technical analysis. Explained below are the best ways to trade with this type of analysis:
Use Few Indicators: You will discover in your trading Forex and experimenting with different trading strategies that the best way to make money is by using few indicators to help you determine your trades. If you apply and plot too many indicators on your trading platform, you will end up being confused and unable to make any trading decision and even, if you do it might be the wrong decision and you may loose your money in that trade.
Use Leading Indicators: when using technical indicators to trade the Forex or currency market you will notice most the indicators are lagging indicators, which means they will signal a trade too late after the currency must have already moved. They lag behind the market and are not reliable to use in any trade. If you are to trade with any indicator that is reliable and effective for the currency market, you should use leading indicators which will signal a trade early enough for you to get into the market. Examples of leading indicators you can use are RSI, MACD, Stochastic, etc all this are oscillators.
By using technical indicators properly with good money management you can be sure of making profit constantly on your trading account always. But remember to demo trade well if you are a newbie in Forex before going live.