Knowing about Forex (Basic Principle)

As mentioned in a previous article (Forex = Gambling, Negative Rumors about Forex), playing the forex without knowing the analysis means that we do gambling therein. And obviously, with gambling then it will lead to losses. Unfortunately events like this not only experienced a few new players in the world of forex. There have experienced loss of tens to hundreds of millions realized without good analysis forex trading then the same with gambling.


That's why learn Forex trying to emphasize the importance of analysis in forex trading. Without it, do not expect we will benefit in the long run. If any benefit, usually because of luck and will not last long. Within weeks to months, all our funds are usually sold out due to lack of knowledge analysis.

So we can conclude that knowing the analysis of price movement is an absolute must know the forex players.

Broadly speaking, the analysis in forex trading is divided into two ways, namely Fundamental analysis and Technical analysis. Both are based on assumptions that differ from each other. You can see the divisions in the diagram below:

Fundamental Analysis

If you've ever heard on television about the rise in world oil prices or the decision of the Fed, the Fed to raise interest rates, that is what is called the fundamental news. The news is highly influence on market prices and a huge influence on the portfolio of an investor in the forex. The analysis relies on fundamental economic news is called fundamental analysis.

Fundamental analysis argues that the price moves because of the news and government policy, and the market response to the news released.

In fact the fundamental news like this is moving the price in the forex market. Any news that has been or will appear elicit a reaction from the market or the trader which resulted in the occurrence of price changes. That is, news that appears able to make changes to the price currency of the country concerned. This change also eventually encourage the government as the holder of the monetary authority determines economic policy so that it appears the next new fundamental news. Thus this cycle spins onward.

For a fundamental analyst, the speed, accuracy and ability to forecast news (forecasting) the market reaction to news is a vital component issued an absolute must-have. Without the above factors, it is difficult for a fundamental analyst utilizing the existing news in order to gain profit.

Take a simple example. For example when we heard the news that the Fed has just raised interest rates by 25 basis points (equal to 0.25%) a few minutes ago (here is no longer a matter of hours, but minutes even seconds! Disadvantaged in hours means the opportunity has passed! ), in general, then the USD will strengthen and Buy position can be done. Well, let's say you hear this news after 2 days later. This important news was of no use anymore because the market has finished reacting even the possibility has been entered a period of correction. Thus, the speed gain is very important news here. So did you hear the news source. No matter which story you hear is not valid throughout the market have the same perception with you. Its size is the market, not on the truth or falsity of the news.

In the forex world there are more than 50 types of fundamental news issued by each country and each story has a different effect on price movements. Well, now the question remains, what are the 50 th news? And how the influence of each story appearing against currency movements?

Two of the above questions will be answered in the article a more detailed analysis of the fundamentals again. Not on this article because this article only discusses the introduction to the concept of analysis before you start analyzing both technical and fundamental.

Fundamental analysis is the basis of information / news (news) derived from:

        Agency Official / Government
        Print / electronic
        Individual

In accordance with the source, then the Fundamental methods are subjective, depending on the degree of confidence Investor / Consultant to the source of the news.

Technical Analysis

In contrast to fundamental analysis, technical analysis went on the notion that price movements can be predicted from the past. That is, with a row of data in the past price movements, we can predict the future movement. Something really unreasonable according to fundamental analysts.

Method of Technical Analysis is a method for analyzing past data from the market price data, volume and open interest unntuk predict price trends during dating.Data these details will then be presented in the form of charting (GRAPHIC).

Basic calculations in technical analysis is a mathematical fact that most of them are statistical and the science of chaos theory (pattern recognition). So it took exactly the approach. Thus the results obtained can also be a number of exact and definite. Something that can not be given by fundamental analysis. Some technical analysts even said so: "Technical analysis is a cheat trading".

If so, is better than technical analysis, fundamental analysis? No. Remember, that the fundamental news that gave birth to fundamental analysis is the real mover of the market, rather than technical analysis. According BelajarForex, each has its pros and cons of each. Technical analysis for factors known to exact and applicable to any method of trading (day trading, weekly and even monthly to yearly). Known for his fundamental analysis can predict a significant and sudden movements that are caused by the discharge of the important news. Here we extracted in tabular form:

Weakness Weakness in the Fundamental Analysis Technical Analysis
It takes time to obtain information. Requires a lot of data to support accurate prediction.
Often subjective because it involves a lot of people's opinions. Relies heavily on the ability chartist. Each chartist have different methods and each is not necessarily suitable to be applied to each other.
More suitable to be applied on a long term trading period.
Difficult to apply in an inefficient market.

Back around the technical analysis, as in the diagram shown by BelajarForex, technical analysis is divided into three major indicators, Fibonacci sequences, and the Elliot Wave Trading. Indicators are a series of formulas created based on statistical science and used to predict the trend, the point of support, ressistance well as overbought and oversold. While the Fibonacci sequence, and Elliot wave analysis based on pattern recognition based on number patterns and shapes of existing graph.

There are over 50 types of indicators that you can learn in technical analysis, Elliot wave patterns of 11 standards (excluding derivatives trading that developed individual and community research lab or other specified). While basing the calculations on the Fibonacci sequence Fibonacci series that is widely used to calculate the movement of random objects that have a certain pattern (such as currency price movement).

For now learn Forex has provided the fundamental lessons of some indicators that you need to know. Expected at the times to come, articles about the Elliot Wave and Fibonacci will be displayed. All this with the aim to equip you as an investor or prospective investor in the world of forex trading.