Page 15 - NOT FOR SELL SIBUSISIWEFXupdate_Neat

TECHNICAL ANALYSIS

What is so great about Technical Analysis?

Once a trader masters technical analysis, it can be easily applied to any currency or time frame.
Technical analysis allows the user to figure out, in a relatively short time, where trends are going.
Because of the short time it takes to study price curves, technical analysts are able to follow many
currencies at the same time, whereas fundamental analysis usually focus on one or two pairs of
currencies, because there is so much information in the market for them to analyse.

Technical analysis offers many different ways to traders analyse market information. Traders who
use fundamental analysis can sometimes run into trouble because the sheer amount of data they
are attempting to organize can be overwhelming. This can lead to misdirection, misunderstanding
and ultimately, loss of money. On the other hand, technical analysis can be much more
straightforward. Many traders even consider it to be self-fulfilling, meaning that it works well
because so many traders use it. This is an important aspect of technical analysis because if many
traders are basing their decisions on technical indicators, then the indicators must be watched since
they reflect the sentiment of the market and the majority of the traders.

Why is the Foreign Exchange Market the Best Market to use Technical Analysis?

The foundation behind using technical analysis is to find trends when they first develop, which
allows the trader to follow the trend until it ends. The foreign exchange market is typically
composed of trends and is, therefore, a place where technical analysis can be effective. Traders are
able to speculate on both up and down trends in the foreign exchange market because it is possible
to Ask a currency and Bid against another currency. This aspect of currency trading works well with
technical analysis, because technical analysis helps determine where the trends are and which way
they are going, thus giving the trader a chance of profiting from the market, regardless of its
direction.

In Comparison to the equities and futures markets, technical analysis is much more common and
popular within the foreign exchange market, which causes the traders to pay attention. The market
partly moves because of all the technical analysis performed. For example, according to technical
analysis, if a currency pair decreases, then majority of traders will Bid the pair, causing it to drop
further.