When you start your journey in the forex trading market, it is important to have a thorough understanding of various functions in the trade market. When one acquires knowledge in one market, it becomes easier for them to excel in that field.

This is where analysis helps. If you are forex trading and pursuing a career in it, forex trading analysis helps you understand the market and its performance. With insightful eyes, you can predict how the market will perform and invest accordingly.

With the performance of the forex market trading depending on various factors, it is important that you have information to conduct proper research before making any investment.

That being said, let’s understand the significance of the market analysis for a forex trader.

Significance Of Forex Trading Analysis

Traders decide to buy and sell on the market based on the trading strategy and market analysis. With thorough market analysis, you can review the situation and study the major economic event for the week. With that information, you can then understand the potential of the market and its volatility.

When analyzing such different scenarios, you can decide on buying and selling. While talking about forex trading analysis, there are three different types – Fundamental, Technical, and Weekend Analysis.

Types Of Forex Market Analysis

1. Fundamental Analysis

When you start trading in Forex, you will soon know that there are multiple factors that affect the market’s performance. The publication of one piece of data on the market is enough for the traders to react positively and negatively. The market can sometimes perform on the basis of sentiments, and hence, you need to be careful while going for trading.

While conducting fundamental analysis, you go through figures like GDP, inflation, and job data. You can even look at the economic calendar and get an idea about the financial events in the future.

2. Technical Analysis

Technical analysis is all about reading the market indicators and making decisions based on what indicators are indicating. When you are analyzing the market in technical terms, there are two types of technical analysis.

  • Automated system.
  • Manual system.

In the manual process, the trader looks at the technical indicators and makes the decision of buying and selling.

On the other hand, the technical analysis offers the same information. But the information is generated automatically with the help of market tracking software.

The trader can make decisions based on what the indicators are suggesting.

3. Weekend Analysis

The weekend analysis is totally different from the two we have mentioned above. The weekend analysis does not depend on how the market is performing every day. Instead, it is more about evaluating the price fluctuation on a weekly basis.

To use this strategy effectively, you need to maintain a ledger of how the market is open every week and how it is ending. After analyzing the ledger, you would know what that step would be when you come across the same trade situation.

Tips To Analyze Forex Market: Learn From Leading Traders

While analyzing the forex trade market to make buying and selling decisions is important, sticking with too many indicators can be confusing. This is what we experts call ‘Paralysis By Analysis.’

At the same time, you need all the information in real-time to know what is happening exactly at the moment. For that, you need the best vps for traders. Once you have all the necessary things to start, the following tips will help you analyze the market in real-time and make decisions accurately.

1. Momentum Is The Key

Momentum is what helps you make money or lose all your investment. Being able to read the momentum from your action price chart helps you make fast decisions. Furthermore, if you can understand momentum, you will have the edge over other traders by finding the early investment signals.

When we look at momentum, we mean trend strength. You can follow the trends by looking at the candle size and the ratio between the bullish and bearish candles.

Below are a few points that will help you understand the momentum.

  • High momentum: Long candle with small wicks.
  • Bullish momentum: More bullish candles with a few bearish candles.
  • Lack of momentum: Small candle with long wicks.

2. Trend Structure

Every good analysis of the market starts with the trend structure. This type of analysis solely depends on trend trading. People who use this analysis usually enter the market when the trend is rising and find an exit point when the trend structure starts to break.

Forex traders who usually use trends to make money, they look for the dips that come in between the uprising trend. While this method is good for making money out of forex trading, you need to have a keen eye to find the right entry point.

However, if the traders are new to forex trading, they simply use the reverse signal and wait for the new trend to start.

3. Price Action Structure

When you are looking at the price chart, you will come across dozens of price structures and patterns. While everyone has their own specific pattern to follow, we personally like to follow the two-shoulder pattern.

After using the shoulder method, you will find that it is among the most powerful signals and really pays off to study this pattern in depth. By analyzing different patterns and heads, you will be able to tell how the market will perform.

4. Price Action Barrier

When you are trading in forex, finding a confluence area on the chart can help you look for turning points or break out for new trends. Forex traders who use this method to find the breaking points and use them as entry and exit points of the market.

While you are using the chart to create a price action barrier, it is important that you keep your chart clean. We would advise you to make your chart and create price barriers based on the current price.

Don’t be an amateur and create too many action zones that create a mess and leave you at the start of the confusion.

5. Rejections

Rejection is the last strategy, combining all the tips we have mentioned above. The rejection most happens when the DOW trend is about to end. In our experience, we have seen that the best rejection happens when the momentum is going strong.

Rejections are better than support or resistance. This is because they are a combination of classic patterns such as rectangles, triangles, and shoulders.

Understanding The Market

As a trader, you must learn the market thoroughly. You cannot become an expert in forex trading. Along with money, you need to invest your time in the forex market, strategies and different platforms.

For starters, you can learn more about forex trading on a forex-related platform and website. You can read what experts have to say about the market and strategize your investment plan accordingly.

In fact, you can even talk with experts by attending their webinars to gain insight into the development of the forex trading industry.

If you have a student’s attitude toward learning, you can expect better results from marketing in the long run.


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