Without any doubt, technical analysis is very important for forex trading – it is inevitable when it comes to identifying the entry and exit points in the trading process. However, trading forex doesn’t come to finding the entries and exits only. Technical indicators are not enough for creating an all-inclusive picture of the forex market.
In this respect Forex fundamental analysis turns out to be of great use for the forex market. It is so because such factor as the forex market sentiment can’t be discarded. And the market sentiment is influenced by political and economic news at the first rate. The crucial market makers in forex such as central and investment banks, hedge funds and multinational corporations analyze the economic and political news for making forex trading decisions on a daily basis.
The best thing about using Forex fundamental analysis indicators, such as economic news, for the forex market is that they are equally available to all the participants of the market. The most important economic indicators that have an impact on the forex market are GDP, trade balance reports, employment statistics, growth rates, inflation and interest rates. The reports about these data are released monthly. Definitely, each forex trader can take advantage of it.
The main thing about making the most from the economic data available is that forex traders must react very quickly to it, since it takes the news some time to filter through the market and the market and the market to start responding.
Of course, floating in the sea of economic news and making money on forex is not that simple at it seems. Economic indicators, data and figures are senseless without the forex trader’s ability to evaluate them correctly. It is said that forex market trading relies on perception and expectations, thus, in order to “read” these expectation one has to develop some skills, which come with experience.
Certainly, relying on economic indicators only won’t produce a profitable trade in forex. This is the point at which technical indicators come in very handy. In order to create a forex trade with a highest probability set-up, a forex trader should scrutinize the economic and political factors that can influence the currency price carefully, and then decide on when to enter and exit the trading process. Thus, using fundamental and technical indicators must be a matter of
balance. However, mastering the intricate science of combining these two important constituents of forex analysis will facilitate making forex trading decisions and eventually result in larger profits. Also if you want to trade profitable and don’t want to have a headache every day – choose best Forex expert advisor and it will trade automatically.
Author byline: Article written by Alexander Collins. Alexander is founder of ForexEASystems that provides forex trading systems and forex strategies since 2007.