There are two ways to analyze the market movement and make trading decisions. These two ways are complemently each other.
Technical Analysis
Technical analysis focuses on the study of price movements. Historical currency data is used to forecast the direction of future prices. Therefore, studying price action is all that is required to make informed trading decisions.
The primary tools of the technical currency trader are charts. Traders are used to identify trends and patterns in order to find profit opportunities. Being able to identify trends in their earliest stage of development is the key to technical analysis.
Fundamental Analysis
Traders who prefer fundamental analysis to make trading decisions examine a wide array of economic, social, and political.
However, there is no single set of beliefs that guide fundamental analysis. The main idea behind this type of analysis is that if a country’s economy is doing well, their investment volatility will also be doing well. The fundamental factors, such as :
- Trade balance
- Gross Domestic Product
- Unemployement rae
- Interest rate
- Inflation rate
- Country risk
- Market sentiment and expectation
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