What type of analysis is used in the Forex market? History of origin: how it all began and what is the meaning of it for online trading.
In order to correctly calculate the risks and weigh possible situations during the operation of buying and selling a currency, traders, since the emergence of this market, have used the methods of technical analysis of operations.
Meaning and history of appearance
It is clear that Forex arose long before the appearance of the first computer, but it was necessary to conduct accurate calculations of operations even then.
Thus, speculators in their work used tools that helped to technically analyze the situation and draw up an analytical picture of transactions already completed.
So, the main tools at hand from the beginning of the founding of Forex were pens, pencils, with the help of which charts were displayed. With the help of these charts, traders tried to analyze and predict behavior.
Later, a number of patterns were deduced between the structure of charts and price changes, thus, began to appear figures trades, which became the fundamental factor in the formation of technical analysis.
Later, however, with the help of calculators, they learned to calculate the average prices for foreign currency and used them for analysis. Later, in the era of the heyday of computer technology, traders began to actively use oscillators in their activities.
Read also - When to enter a forex trade? Simple rules for a beginner!
As for technical analysis, it is based on the cyclical nature of phenomena existing in nature, that is, the systematic repetition of the same event.
- First: currency movement, quotes and other operations can be planned and predicted.
- Second: this is a graphical principle, based on which, in the established exchange rate, all the factors affecting the price are already included.
This is a series of external and internal factors displayed by a graphical method. It is also necessary to make a temporary adjustment, taking into account the timing of the impact on the currency of one or another factor.
- Third, the principle of price direction indicates that prices tend to move in one direction, that is, to be trending.
Accordingly, the task of technical analysis in the Forex market is to identify the very trend and predict its behavior in the short and medium term. Therefore, you should not at first go against the trend, you need to follow it. Also you can look Forex SMS signal report.