Trading is an activity of trading investment instruments in a short time. Additionally, it can provide benefits in a short time. Therefore, a trader needs to be careful in choosing a strategy that he will use.
Trading activities certainly require knowledge of price analysis. Moreover, you need price analysis which can help you to predict price movements in the short term.
As novice traders, you have to know market analysis techniques since it is an important part of the trading learning process. Therefore, a good and accurate analysis will increase your trading results. Generally, there are two kindsof forex analysis, that is fundamental and technical analysis.
Fundamental analysis is an analytical technique that involves your economic knowledge. You should find patterns of price changes in the forex market. There are some factors that you should analyze using this technique. It usually includes a large reference interest rate, unemployment rate, large GDP, and various economic data.
For example, a trader will use a fundamental analysis of the EUR / USD currency pair. He will look for data and information about interest rates in the European region and the United States. Additionally, the trader usually will always follow the news related to economic and political policies from European countries to find out the economic health of the United States currency.
In contrast to fundamental analysis, technical analysis is an analysis technique that involves trading software and various indicators to determine the direction of price movements in the forex market. According to Investopedia, technical analysts focus on patterns of price movements, trading signals and various other analytical charting tools to evaluate a security’s strength or weakness. If fundamental analysis can only be done manually, then technical analysis can also be done with the help of a computer or machine.