Learning the True Art of Forex Technical Analysis

3 Mins read

It takes only two steps to execute a trade in the Forex market. The first one is market analysis and the second one is the trade execution. Many of you are already aware of these two stages. The first step which is known as the market analysis is done by investors to identify the potential place to take the trades. The second stage is where the investors hold their positions to make a profit out of a trade. Both steps are equally important and complementary to one another. So, to become successful in trading, you must master these two steps.

In this article, we are going to discuss the importance of in-depth market analysis. Read this article thoroughly if you truly want to change your life.

Market analysis 

When you go to buy a product, do you buy it directly? No. You first try to have an idea of the market value of the product. You might roam from one outlet to another to find the most reasonable offer to buy that product. If you have no idea of the market value, you might lose a decent amount of money from a certain deal. That’s why a market analysis is very important before buying or selling anything.

So, in trading too, market analysis is an important factor. However, the range of such market analysis is bigger and since all the trading work is done virtually worldwide, it is hard to keep a track of the market offline. That’s why all the price entries are entitled to certain charts which help to inform the investors about the price changes. In this way, investors have an idea of the market changes.

Why is market analysis important?

The Forex market is highly fluctuating and has a high tendency of shifting without any further details. That is why investors need to understand the market prices properly before taking any decision. Now, since the market is highly reactive to supply and demand, investors only get such clues from market analysis. For these reasons, the importance of market analysis is very high. While doing the analysis, try to use the platform from high-end brokers like Saxo Forex broker. A premium platform usually provides you with better tools thus you will be able to do the perfect market analysis.

Now that we have learned about market analysis, we should take a look at how to be better market analysts. So, here are three powerful tips that can help you become a better investor. 

Critical analysis

This is your first tip into market analysis. You should focus on your market analysis first before stepping into any executive actions. You must have heard the proverb, ‘Look before you leap’. It means you should always think twice before doing anything. Failing to analyze the support and resistance level professionally may become the prime reason for losing money. Try to evaluate the market data in a higher time frame as it gives you a better overview. Use the candlestick chart so that you can predict the market direction by evaluating the price action signals.

Trade with confirmation

Only enter a trade when you are confident about the market changes. However, you can never be 100% sure of the trading market as it is an impossible thing to ask for. But if you have your calculations correct and you might be able to speculate the market correctly most of the time. If you are even a bit confused, it is better to stay away from entering the trade. Try to use the indicators as a confirmation tool so that you can win more trades.

Trading after the major news release

High-impact news has great potential to alter the course of the trend. So, you should take your decisions only after evaluating the fundamental data properly. Some of you might not feel comfortable in the deal with the news event and it’s absolutely fine. There is no reason to risk real money when you can make a decent profit by trading during stable hours.