Which Type of Forex Analysis is The Best

If you’re one of the traders who’s looking for the best way to earn profit in the foreign currency exchange market, you might be asking, “What kind of forex trading analysis should I use to maximize my profit in trading?”.

If you’re one of the traders who’s asking the same question, then you’re reading the right article! Just keep on reading this article to find out which is the most appropriate for you to use.

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Truth is, you should never rely on just one type of forex analysis. Each of the analyses has their own strengths and weaknesses, and each of them functions in different ways.

For example, if you’re a technical analyst, and you decided to use only one type of analysis (in your case, it’s the technical analysis), you might miss all the signals that the two other analysis might give you. Say for example, as you’re looking at the technical charts, you found out that there is a good opportunity to trade using the GBP/USD pair and make huge amount profit. Without even considering the fundamental and sentiment analysis, you decided to follow your technical charts, and you opened multiple lots at the GBP/USD pair.

Then suddenly, things turned against your odds, one of the major banks in London filed for bankruptcy. Due to the event, the sentiment of the traders towards GBP turns sour and everyone traded in the opposite direction.

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And because you chose to ignore the fundamental and sentiment analysis, you are left with big losses.

That was just an exaggerated example. But it’s true. Sometimes, one kind of analysis might say that there’s great opportunity, but the other might say otherwise. So, it is important to use different types of analysis and don’t just rely on one so that you will avoid being misled and avoid losing a huge amount of money in return.

Learn more about forex and further understand what is forex by referring to our educational blogs and articles. Find out who the best forex brokers are, visit Wibestbroker.com to see who they are!

What is Fundamental Analysis

As discussed in our previous article, in the foreign currency exchange market, there are three different types of forex analysis used in predicting the future movement of the market.

In this article, we’ll discuss about the Fundamental Analysis, its function and its significance in the forex market

First of all, let’s talk about what fundamental analysis is.

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Fundamental analysis is the procedure of assessing a security that involves attempting to predict and measure its intrinsic value through the evaluation of the related economic, financial and other qualitative and quantitative factors.

The trader who uses fundamental analysis tries to examine all the factors that might influence the price of the security, which involves macroeconomic factors – such as the overall economy and industry conditions, and company-specific factors – such as the examination of financial data, business concept, management and competition.

Similar to other types of analysis, the objective of the fundamental analysis is to develop a forecast and take advantage and profit from the future price movement.

Fundamental analyst predicts the future price of the security through the use of the economic, industry and company analysis. With the combination of those three factors, the fundamental analyst is able to derive the security’s current fair value, which would be used to forecast the future value.

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If the fair value is not equivalent to the current value of the security, the fundamental analyst acknowledges that the security is either under priced or overpriced. Say for example, if the fair value of the security is higher than its current price, then it is considered as “under priced”. On the other hand, if the security’s fair value is lower than its current value, then it is acknowledged as “overpriced”.

Fundamental analysts believe that the security’s value will ultimately gravitate towards its fair value. And since fundamental analysts uses the security’s fair value as a basis in predicting its future value, their trading decisions are greatly influenced by it.

Say for example, if the security’s value is overpriced, they believe that the security will fall and thus they consider this as a good time to SELL.

On the other way around, if the security’s price is under priced, they will see this as a sign that the price will go up and thus, considers this as a good time to BUY.

Learn more about forex trading and fully understand what is forex by referring to our educational blogs. See who the best forex brokers are, visit Wibestbroker.com to find out!

Three Types of Forex Market Analysis

In forex trading, there are several techniques and tools that you use to predict the market’s next movement. Generally, most of the traders rely on the news and the market analysis to guide their decision in forex trading. In this article, however, we’ll focus on the different forex market analysis.

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3 Types of Forex Analysis:

  • Technical
  • Fundamental
  • Sentiment

There are three types of forex analysis, namely the Fundamental Analysis, Technical Analysis and Sentiment Analysis. Each analysis focuses on different areas, so it is important for you to determine your objectives first before deciding which analysis to use.

What Is The Best Forex Analysis

As a trader who wants to earn the highest possible amount of profit in trading, you might wonder which forex market analysis would bring the best amount of profit to the table. Truth is, each analysis is never better than the other.

Trade where you’re most comfortable  and profitable with. Say for example, you’ve been using technical analysis for quite some time, and you’re getting good trades with it. You should not shift to fundamental analysis just because you heard it is better.

Truth is, each of them has their own uses, and they work well in different situations. For example, the technical analysis is great in studying the movement of the price of the currency, while fundamental analysis is perfect in studying the country’s economy.

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Different market analysis works best when they are used together. Often, it is a mistake of most traders to rely on just one kind of forex analysis. What they don’t know is, forex analysis works best when they are used in combination with one another.

Each of them has their own strengths and weaknesses and you need to fully understand all of them so you would know which to use and when should you use them.

For further understanding of each of the forex market analysis, refer to these related blogs and articles.

Learn more about trading and further understand what is forex by referring to our educational forex blogs. See who the best forex brokers are, visit Wibestbroker.com to find out!

Importance of Forex Trading Articles

If you are relatively new to forex trading, you might come across a lot of unfamiliar jargon and trading terms that might appear confusing to you. It’s like moving to a new country, you can clearly hear the words, but you do not know what they mean.

You definitely want to fully understand each and every unfamiliar term, but as a newbie in the industry, you are confused and unsure where to start. Luckily, you are on the right page, we will guide you in the right direction.

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Understanding each of the forex trading terms, especially those which you encounter on a daily basis, is very important to survive in the forex trading market. Without enough knowledge and understanding of these terms, you are most likely to fail and lose your investments in the long run.

That’s the purpose of the forex articles, to equip you with the knowledge you need to achieve success in forex trading.

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With the proper knowledge of the forex market and all of the trading terms that are associated with it, trading in the forex market will be like engaging in a battle wherein you are fully equipped with weapons and armor, you will be more than ready to win the fight!

Achieve success in forex trading by reading our educational blogs and articles! Fully understand how the forex market works and what is forex by referring to our official Facebook Page. See who the best forex brokers are, visit Wibestbroker.com to find out!

What is Binary Option

If you are relatively new to forex trading you might wonder what “Binary Options” is and how does it work in the financial markets.

To further understand what binary options is, let’s talk about how do most investment forms in other trading market works.

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In most forms of investment, the investor purchases the security they want to invest in and their profit or losses will be determined by the changes in the price of the security. For instance, if the investor decided to sell the security he purchased in the event that the price has risen, then the investor is making a profit. On the contrary, if the investor decided to sell the security back to the market in the event that the price has fallen, then he’s accumulating losses.

Such kind of investment is very stressful for the investor, since he constantly needs to worry about when to enter and exit the market. Luckily, binary options trading is a lot simpler.

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In Binary Options trading, the investor simply needs to determine whether the value of a security will rise or fall in a specific time period. The investor is only required to make one of the two possible trading decisions whenever they are to place a trade – “Call” or “Put”. (These are further explained in this article) For example, if the security of your choice is gold, you simply need to determine whether the future price of gold will rise or fall in a specified time period, and then place your trade based on your prediction. So, let’s say you believe that the gold will rise in value in the specified time period, then you will need to place a “Call option”. On the other hand, if you believe that its price will fall, then you will have to place a “Put Option”

Get more familiar with the forex market and fully understand “what is forex” by reading our forex educational blogs. Determine who the best forex brokers are, visit Wibestbroker.com to find out!

Making Profit From Short Selling

In the foreign exchange market, there are lots of strategies you can use to earn a considerable amount of profit. In this article, you will find out how can you make a profit using the ‘short selling strategy’

First of all, let’s discuss what short selling is and how does it work.  Short selling is the act of selling a security that the seller doesn’t own (or which the seller has borrowed). It is done by the seller in anticipation of an impending decrease in the security’s price.

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If you think that you can only profit from a bullish market, we’ll prove to you that it’s not true. You can profit from the forex market no matter which way the market moves – as long as you’re guessing it right.

So, basically, how can you profit from short selling a security? It works like this:

Say for example, you’re expecting that the Microsoft’s stocks, which trades for $20 at the moment, will decrease in price in the near future. Due to that anticipation, you borrowed 100 shares of it and sold it thereafter. You are now 100 shares “short” of Microsoft’s stocks since you have sold something that you did not own (borrowed) in the first place. The owner, however, may demand the stock back at some point.

Say, a week later, your prediction came true, and the stocks of Microsoft declined in price. The stocks, which was originally priced at $20 per share, suddenly declined to $10 per share. After hearing the news, you decided to buy back 100 shares of Microsoft to “cover” or replace the borrowed shares. Since you’ve previously sold 100 shares for $20 per share, and then bought back 100 shares for only $10 per share, you’ll realize that you’ve made $1,000 of profit in total.

manage your risksShort selling is an effective – but risky way of making money in the financial market. You should be aware that if the market suddenly turns the other way around, and the stock’s price surged higher than before, you’ll end up losing money rather than making profit.

With proper understanding of the market and what is forex, you’ll be able to make better trades while minimizing the risks associated with it. See who the best forex brokers are, visit Wibestbroker.com to find out!

What is Carry Trade

If you are reading this article, then you might have already heard of the term “carry trade”, but you’re still unsure of what it really means. In this article, we will discuss what carry trade is and how can it affect your forex trading journey.

Regardless of what kind of trader you are (stocks, bonds, currencies or commodities), you probably have encountered the word “carry trade”. Carry trade is a popular strategy used by traders to take advantage of the difference in the interest rates of two currencies.

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The strategy works when a trader uses a currency with relatively low interest rates to buy a currency with a currency that has a higher interest rate.  The trader’s goal is not only to earn the interest rate differential between the two currencies, but also to look forward for the currency that they purchased to grow. To get the most out of the currency carry trade, you must sell a currency with a stationary or contracting interest rate to buy a currency which interest rate is about to appreciate.

The most common and profitable example is the Australian dollar/Japanese yen currency pair (AUD/JPY). The reason behind it is because the interest rate spreads of these currency pairs are very high – the Australian dollar’s interest rate is 2.90% while the Japanese yen’s interest rate is -0.1%.

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Say for example, you are trading with the currency pair AUD/JPY, and the Bank of Japan decided to lower their interest rates this year. Not only you will profit from the interest rate differential between the two currencies, but you will also gain profit from the depreciation of the Japanese currency.

With the right broker, strategy, timing and currency pair, the carry trade can bring a considerable amount of profit in your pocket. Learn more about forex trading and understand what is forex by reading our official blog sites. See who the best forex brokers are, visit Wibestbroker.com to find out!

What Moves A Currency?

If you are fairly new to foreign currency exchange market, you might wonder what moves the currency markets. In this article, we will discuss the different factors that can affect this movement.

If you are a forex trader, it might be easy for you to get a “tunnel vision” and only notice the security you are trading and their prices. If you are this kind of trader, and you only focus on the currency markets, then it might be too easy for you to overlook the other things that are going on in the markets.

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Often a common misconception of newbie traders, they usually think that other markets such as commodity markets have nothing to do with the prices and conditions of the different currencies.

However, that isn’t true. In fact, all kinds of assets, whether its commodities, equities or bonds/interest rates, have a direct impact in the currency market.

In order to keep a close track of the movement of the currencies, there are several fundamental indicators that you must keep a close watch to. Non-farm payrolls, Purchasing Managers Index (PMI), Consumer Price Index (CPI), retail sales and durable goods are just some of them.

So, one of the most important things that you should consider is the economic condition of the country of the currency that you are trading, as that will have a direct impact on the country’s interest rates; depends on what the central bank is going to do.

Also, you can look at the prices of the commodities, as some countries are dependent on commodities. If they’re an exporter of these natural resources (e.g.: oil), the commodity’s price will have a direct impact on the country’s economic conditions, which will also affect the country’s currency.

For example, the country Canada is a big exporter of crude oil. Say for example the price and demand for oil rises suddenly—that alone will have a big impact on the country’s GDP (net exports) and it’s going to contribute to the economic condition of the country. If there is a sudden growth in Canada, then you can also expect a stronger Canadian dollar.

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Even the regularly scheduled meetings of the central bank can greatly affect the movement of the currency market. Generally, these meetings are often called to discuss interest rates, inflation and other issues that can affect currency valuations. Even just a statement from the Federal Reserve chairman can cause volatility in the currency market, so you also need to keep a close watch on this.

Learn more about the forex market and have a clearer understanding about “what is forex” by reading our educational blogs. See who the best forex brokers are, visit Wibestbroker.com to find out!

Trading Principles: Introduction

We have previously discussed about the different forex trading terms that you need to understand to gain success in your trading journey. In this article, we will discuss about the various trading principles of a successful trader.

All traders that are entering the forex market aims to reach the best results. However, there are some trading principles that a trader needs to follow to make a significant amount of profit in trading.

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Create Your Own Trading Strategy

Copying other trader’s strategy won’t get you that far. To be a successful trader, you must understand the market well enough for you to develop a unique and effective trading strategy.

Control Your Emotions

Your emotions are one of the factors that has the biggest impact in your trading success. Your emotions are the one that has the biggest role in your every decision in trading.

The most common example of this is what most people call as “revenge trading”. That happens when a trader loses a substantial amount of money and tries to chase the losses they have made. Since they are too upset of the event, they become so focused on trying to win their money back, failing to realize that they are not trading smartly – resulting to more losses.

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Create Your Own Historical Data

Relying on technical analysis and fundamental analysis will get you far, but definitely not enough to achieve a greater amount of success in trading. You have to make your own historical data. For every trade you make, write down the factors and circumstances that affect your decision to open/close orders. Review the results of your decision regularly.

Learn From Your Mistakes

It’s pretty normal to make mistakes sometimes, but you should never put it to waste. Recognize all the mistakes you’ve done and learn from them. Doing so would help you avoid repeating those mistakes over again.

Learn more about forex trading  and have a more comprehensive understanding on what is forex by reading our educational blogs.

See who the best forex brokers are, visit Wibestbroker.com to find out!