In Forex trading, there are two major trading tools through which you can easily predict the outcomes of your trades. These are basically the technical analysis or fundamental analysis. While these two methods are pretty good, their rules and methods of application are different. In this article, you’ll find out why you should learn technical analysis. It is important to know that Forex trading is extremely technical. People who don’t succeed with Forex trading, suffer more losses tend to do so because they are often lacking in one skill all the other. Technical analysis helps you look at certain key economic factors and market prices and make a decision on when and how to trade. So, in order to become a really good Forex trader, here are some of the reasons why you need technical analysis.
1. Little or no dependence on the future
Unlike fundamental analysis, technical analysis doesn’t depend on what the future holds, future governments bonds, or future economic plans. This is because the analysis is purely based on things that are happening right now. The idea behind technical analysis is based on the fact that regardless of your dependence on future events (something fundamental analysis is mostly about), anything can happen that can change the market trends.
2. It basically tells what the market thinks
With technical analysis, you get to use price movement. What this means is that you don’t have to wait for announcements from countries an economic spokesman. All you have to do is to simply follow the market trends using the price chart and then make your calculations and deductions based on that. Price movement is often essential and technical analysis as it can basically tell you the current price of a security and its market movement.
3. You get visual representation of the mood of the market
Using technical analysis, you can easily get an idea of what the market is saying and the mood of the markets. Most times, using the price chart you can easily gauge the motion in the market. This will help you decide on whether the market is bearish or bullish. The most important thing is that you can use this information to enter trades, execute trades, and exit trades depending on the market trends and movements.
4. Ability to spot the decision points
When you understand and know how to use technical analysis properly, you will be able to spot trends and events all the price charts. These altogether generally tend to help you identify the decision points. With this knowledge you can also determine you what direction the markets is going.
5. Ability to go with the market
Most Forex traders do not make any money or profit from the trades because they tend to fight the markets. But with technical analysis, you will be able to easily go with the market trends and not fight it. This is largely because the price charts will provide you with the means of communication between you and the market; the knowledge of which is an essential key to making profits from the markets.