Forex Forecasting : Three General Types of Market Analysis. Which One The Best?

Forex Forecasting :  Three General Types of Market Analysis.

There were traders  in different types of forex forecasting, how traders made some Market Analytics and used it as basic for decision buying or selling currency/ CFDs /Stockcs. Each trader has their own favorite method. In general, these types of market analysis were  generalized in three types :

1.    Technical Analysis
2.    Fundamental Analysis
3.    Sentiment Analysis

It is true there  many fanatic ( of a certain market analytics) traders claimed that technical analysis is the best one for giving superior forex signals, or other groups said fundamental  analysis much better, or some said sentiment is more precise. Don’t be confused. The three types all are the best. It’s just like if you have three different legs, if one of them broke, you feel the pain.
Technical analysis is the study of price movement on the charts, fundamental analysis pointed at how the country’s economy condition and  Market sentiment analysis determines whether the market is bullish or bearish on the current or future fundamental outlook.
Every types is essential for your trade, depending the situations.  No need tu rush and don't think about fast track to forex. Learn it all step by step, practice it and time after time you will learn how to use these different type dealing with certain situation and taking advantaged gaining profit or minimized risk from it. Every type has it's own advantage to generate trading signals based on certain conditions, sometimes they need to be mixed, it's depend on you. The point is, goo trade as you like. as long as you generate green pips then you did in the track.

The Basic 1 : What Is Forex ?

I'm not a Forex Mentor, but here is a brief definition for you about forex. Let’s said, you are American and went to United kingdom. In the U.K airport, you might find a currency exchange booth at the airport, also you might seeing a screen displaying different exchange rates for different currencies. And then you exchange the money ( $USD) you have into pound sterling (£ GBP). You do that and basicly you’re participated in the forex market! In other words, due to forex terms, assuming you’re an American visiting U.K, you’ve sold dollars and bought Pound Sterling.

Forex, or FX a.k.a foreign exchange market is the largest financial market in the world. Compared to the measly $22.4 billion a day volume of the New York Stock Exchange, the foreign exchange market looks extremely large with its $5 TRILLION a day trade volume. The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of about $22.4 billion each day. Now, forex market brought to your home. You can participated into forex market as long as you  haveinternet connection. Online forex trading became a huge industri nowadays and who knows, you can taking advantages on it.

Before you jump into the forex market, it is a good idea to do some research. Learn about forex, join international forum and forex international clubs that opening discussion about forex, surf internet, find the community.

Just remember the rules, greed when other fears and fears when other greed!

Forex Indicator : Moving Average

Basic Moving Average Learning

Moving average  (MA) is a trend following indicator. Moving average is widely used by traders in the world because it is versatile and easily constructed. It indicator for follow trends in the movement of a currency. Moviing average identify and signal to a technical trader that a new trend, a sustained movement either up or down in the currency, has begun or that an old trend has ended or reversed. It is easier to see using a moving average is that it acts to smooth the volatility inherent in looking at the price action alone to recognize trends.

Moving Average could shows you the average price in the period of time.  Moving Average of different types (Weighted Moving Average (WMA), Exponential Moving Average ( EMA) and Simple Moving Average (SMA) ) differ from each other only in terms of weight coefficients, which are assigned to the last data.

The basic to use moving average is to just plot a single moving average on the chart. When price action tends to stay above the moving average, it would signal that price is in a general uptrend and if price action tends to stay below the moving average, that indicated downtrend.

Here is the illustration: 

The red line is Moving Average. Price action represented by candlestick chart, tends to stay above the red line (Moving Average). In this case, we can say that current trend is uptrend ( bullish).

Some trend followers use this indicator to make forex forecasting and made decision. Is it that simple? The answer is NO. This only basic used of moving average. The fact is, you need to practice use this indicator in different terms and sometimes you need to set up more than one moving average on your chart in order to provide more qualify signals.

BASIC FOREX - PIVOT POINT

Support & Resistance

support levels are considered levels at which price decline is continually rejected. Conversely, resistance levels are considered levels at which price increase is continually rejected. Traders looking at a support level and resistance level in conjunction with one another are essentially examining what is referred to as a channel. It is very common to see price trends within the bounds of trading channels; meaning that for hours, or perhaps days at a time, a currency may trade within the bounds of support and resistance levels. Many times throughout a trend the price may test either the support or resistance level, but ultimately if the price is to remain within the channel the support and resistance levels will be tested, but not pushed through.

Just the opposite of what is explained above, if a support or resistance level is tested for hours or days on end without a breakout, and finally the price does push through the bounds of this channel, it may be considered a strong indication that the price will take on an entirely new direction / trend.

Calculating Pivot Points

Key figures are derived from the open, high, low and closing price of the previous day's trading session. These figures should be based on trading days or sessions considered started and ended at 0:00 GMT (Greenwich Mean Time). GMT is used because of the global aspect of currency trading; with various markets (Australia, Asia, Europe, US) constantly opening and closing globally – a 24-hour-a-day market is created. GMT is used to mark the start and end of trading days because it is considered a globally central time.

These calculations are shown for your reference. Most pivot products will draw these levels on your chart for you.

Pivot Point (PP): High + Low + Close / 3

The calculations for support and resistance levels are based on the number calculated for the pivot point itself and are as follows:

First Support (S1): (2 x PP) - High

Second Support (S2): PP - (High - Low)

First Resistance (R1): (2 x PP) - Low

Second Resistance (R2): PP + (High - Low)

As is the case with many technical analysis methods, strategies, and indicators – pivot points are far from an exact science. Pivot points may be completely irrelevant technically when trading right after a major fundamental news announcement. Traders should also consider other technical indicators, the overall trend of the currency pair, and the time frame of the chart they are analyzing pivots on in correlation with how long they plan to remain in an open position.

BASIC FOREX RISK MANAGEMENT

Forex trading could be the thing that promising, challenging, but at the same time also very risky. As the saying goes, High risk, high return. With the risk of loss is very high, a trader / investor requires not only mental preparation and tremendous courage, but also the ability of the brain that control emotions brilliantly and stable. It's no secret that the world trading gains and losses of any kind is a natural thing. Profit or loss is the effect (consequence) for a trader / investor when making the decision to buy / sell. If an investor or trader decides to enter the world of forex trading

In trade, both in general trade and forex trading, there is always a risk of loss! Risks can not be avoided but can be minimized, that is by implementing risk management are:

1. Stop loss and profit limit. Create a limit to how far you are willing to bear the loss and make a restriction to realize profits.
2. Cut loss. If you think the price reverses direction so it does not fit with your prediction, you better 'bear' to cut losses rather than to bear greater losses, especially those of you who do not set limits for stop loss.
3. Switching or turn around / direction. If you know that you are incorrectly predicted price movements, for example if you take a buy position that the price tends to be stronger for the down / fall then you can close the transaction before by cut loss. After that you can take short positions.

BASIC FOREX ANALYSIS

Technical Analysis

Technical analysis is the study of price movements in terms of mathematical analysis. From here we can imagine there will be graphics-and computation / mathematical formulas in it. With historical data and current price movements that there is then an analysis could provide a projection in which the value of the price will go up, down, or turn around. Or it could be called a 'trend' this is sought in the technical analysis. By identifying trends or patterns correctly, will be able to help you find the best trading opportunities. Traders believe that “History tends to repeat it self“  So if if a price level of any currency held as a key support or resistance in the past, traders will keep an eye out for it and base their trades around that historical price level. Traders using chart that visualized currency movement in the late periode and try to recognized the pattern so they could define recent trend.

Fundamental Analysis

Fundamental analysis is a way of looking at the market through economic, social power, and political influence supply and demand. In other words, you see that good economic conditions, or nod good. The fundamental idea behind the analysis is that if the economy of a country in good condition, then their currencies will also be good. And result in increased confidence that other countries for currencies. For example, the value of the U.S. dollar continues to rise as the U.S. economy strengthened / improved. The consequence could be higher interest rates to control inflation, the effect is the value of the dollar will continue to strengthe.

  Sentiment Analysis
Sentiment of the market built from trader's opinions, how they expressed through whatever their short or  long position they take. It's helps form the overall. BUT, the truth is that as traders, you can’t move the markets in your own opinions. Even if you strongly believe that the dollar is going to go up, but everyone else is bearish on it, you can do anything about it. Sometimes the chart on your MT5 said it's time for bullish, and so fundamental but if market ( the majority ) have negative sentiment so you have to let it go.

So which one will you choose?

FOREX TRADING ZONE

Forex Trading  Zone (forex market hours) is active time of each trade center. Although the spot forex market is open 24-hours a day, but not all currencies are traded actively  because of the trade center could have been related the differences of actively working hours in the world.

But keep in mind that although each trading center has different active hours, open market occur one after the other so that in the 24 hours you will continue to find trading center is open. This allows you to do a good trade it morning, noon, or night.

Opening and closing time of the market in a trading center:

Forex Market Center	Time Zone	Opens GMT	Closes GMT
Frankfurt Germany	Europe/Berlin	06:00 AM	02:00 PM
London Great Britain	Europe/London	07:00 AM	03:00 PM
New York United States	America/New_York	12:00 PM	08:00 PM
Sydney Austrailia	Australia/Sydney	10:00 PM	06:00 AM
Tokyo Japan	Asia/Tokyo	11:00 PM	07:00 AM

BASIC FOREX KNOWLEDGE : buy, Sell and Quotes

People often get wrong by assume that the forex market is only for professionals in the financial industry,  fore those in nicce outfit and sat infront of monitor and yell in wallstreet, but the reality is that millions of people to cultivate enterprise trading in the forex market every day. To get started Learning Forex, you need to learn about the foreign exchange market, which is where all happen

In a briefly description foreign exchange (forex) trading is an investment instrument of foreign currency trading with other foreign currencies. Profits derived from the changes in the currency exchange rate.  So basically, in forex trading activity our goal is to achieve a profit. To earn profit every trader may perform Buy action and/or  Sell action.  Buy can also be paired with the Bid or Sell. Long can be paired with Offer or Short. So if you read an article about forex and there mentioned Bid or Long term, not to be confused because the two terms is tantamount to Buy or Buy.

Undersatnding quotes is easy. But if we do not understand can be confusing too. Quotes on forex transactions usually written in conjunction with his pairs and follow the ever-changing market from time to time (running / real time).

Another basic about forex's transaction activity is quotes. Two basic things you must remember about reading quotes:

1. First mentioned currency is the base currency
2. Base currency value is always 1

• Bid  is price that you got when we take sell /short position
• Ask is price that you got when you take buy/long position
• Fixed spread with an extension – certain part of a spread is predetermined and another part may be adjusted by a dealer according to market.
• Variable spread – fluctuates in correlation with market conditions. Generally variable spread is low during times of market inactivity (approximately 1-2 pips), but during volatile market can actually widen to as much as 40-50 pips. This type of spread is closer to real market but brings higher uncertainty to trade and makes creation of effective strategy more difficult.