Price analysis is very important in the forex market. It helps when you can do price prediction by yourself. However, this is not always something you will have to do on your own. The forex brokers you use should help. They should be in the business of providing useful information for you.
In our list of the top 10 forex brokers, we include price analysis as essential. The brokers need to provide daily, weekly and monthly updates on the market. Information will help you make the right decision. Most people have trouble because of price analysis.
If you make the wrong choices, it leads to losses. The simple thing to do is have a broker with price prediction available. The top 10 forex brokers are your best bet for price analysis information. Most of the lesser-known brokers might not have what you need.
Let’s examine the three major types of analysis we use in the forex market:
1. Understanding Fundamental Analysis
In the course of our forex education and your trading activities, you will encounter price analysis. We call one branch fundamental analysis. It is important to understand it. You may have heard people say fundamental analysis is not important for day traders.
The reason for this is that they think day traders do quick trades. Most traders believe fundamental analysis in price prediction to be something only long-term traders need to know. However, this is not true.
Day traders and long-term traders both need to pay attention to it. Fundamental analysis in price prediction depends on quantifying current and future factors that impact the economy. This includes:
- Interest rates
- Various economic indicators
These help even short-term traders with decision-making.
2. Understanding Technical Analysis
When doing technical price analysis, we rely on past price movement data to do price prediction on future values. The top 10 forex brokers provide you with charts. On the charts, we focus on movement and analytical tools to test currency pairs for weaknesses and strengths.
Technical analysis examines specific currency pairs over longer periods of time. Patterns may repeat themselves and from them, price prediction is possible.
Using computer software, price analysis gives accurate numbers of price movements. In technical analysis, we dive deep into the math of it all and make sure that nothing gets overlooked or left to chance. Computer software is now sophisticated enough to do everything.
Your broker should provide you with important price analyses and predictions for a better trade decision.
3. Understanding Sentiment Analysis
In this section of price analysis, the factors that influence it are how many people are buying or selling a certain currency. It also incorporates their thoughts about which direction the currency could head toward.
This is where we apply 'crowd psychology'. When traders use sentiment analysis, they look for large investment amounts in a specific currency, headed in one direction.
So, if many people are buying a certain currency, the future number of sellers increases and the number of buyers goes down. This means that there could be price reversal because all the buyers will need to sell.
Find out more about price prediction and analysis by looking at the charts provided.