The term “high profit and high loss” might become the consideration of either novice or professional traders when executing forex trading. Such assumption will linger in traders’ mind and to deal with such matter, traders should do a thorough analysis on finding the exact time when to sell or to buy. Forex trading analysis, in this case, helps the forex traders to determine whether to buy or to sell the currency at particular time. Two familiar analyses, technical and fundamental analysis, have been long recognized and applied by many traders to make such decision and both of analyses have different features in their application.
- Technical Analysis
When the traders apply forex trading analysis named technical analysis to make a decision, they will consider that the past price movement does contribute to determine the upcoming price movement and such prediction will help the traders to make trading decision. To perform technical analysis, both statistics and pattern recognition approach are used to indicate where the future currency movement goes and the result of this analysis is presented in the form of graphics. Furthermore, this forex trading analysis is tremendously helpful for mathematic minded trader to analyze the trend and pattern in the future so that the traders will be able to take the opportunity at exact time when the profit or loss arise.
- Fundamental Analysis
Another forex trading analysis used by the traders is fundamental analysis that considers many factors such as interest rates, unemployment rates, gross domestic product (GDP) and other social and economic events to determine the price movement in the future. Besides, the traders who use this analysis always try to stay up to date with the economic news that provided by some trusted websites or blogs such as FxPro Blog or forexfactory.com that give the information about price movement in the market. By comparing the economic events in a particular country with its currency, a fundamental trader will be able to determine the demand and supply over the currency of that country so that they can predict the currency movement in the future.
Between the two forex trading analysis, there is no best analysis to spot the chance when the profit arise or the price movement goes but it depends on traders’ time frame and access to information to pick up one of two analyses above.