Types of Analysis

So far we have seen some terms and concepts that are necessary to understand, but we have only touched the surface and it is necessary that you learn to make your own analysis.

At the time to operate, there are two types of analysis based on the form of interpretation.

• Fundamental Analysis
• Technical Analysis

Each type of analysis has its own characteristics mentioned, but there has been a controversy of which is better. Particularly think that the best thing is to use a mixture of both.

Fundamental Analysis

Fundamental analysis helps us to interpret the macroeconomic indicators and political decisions of every government. In this way the operator will provide an overview of the economic situation in a given country, and therefore affect the political decisions or economic currency.

Therefore the primary analysis examines the economic environment in general, the political situation and therefore the operator will have a perception of the world situation.

Fundamental analysis focuses on the "cause" and not the "effect", as the Tecnical Analysis does.

Technical Analysis

Technical analysis is used for the interpretation of a chart. This lets us see what is happening and react instantly.

Based on the interpretation of that chart where we see the prices and volumes operated past, we may determine to a certain level can get.

In a technical analysis, we can determine that trend moves a currency, as well as patterns will help us identify purchases or sales. Trends can be primary, secondary or tertiary, these trends we can see from the charts that can be annual, weekly or daily.

The objective of these tests is to know when to buy and when to sell. That is, determine our entry point, and our point of departure.

But as we said in section Basic Principles of the Trader, you must consider that you must always follow the trend, since when operating in the same direction of the have more chances to succeed if we operates against trend.

What Analysis use?

We going to make it clear, in that question, NONE, nothing helps us a Technical Analysis or Fundamental analysis, we need BOTH if we want to succeed in Forex.

Let's see what can happen if we use just one of them.

Suppose we buy thinking that we are going to get a high yield in a given currency, based on a technical analysis clear. But that optimism we had in the beginning is becoming pessimism that have already begun to leave data in that currency you purchased that are not favorable. And of course you will have finished with a huge loss that the only thing it caused to you is a great annoyance.

But Technical Analysis has no guilt, you have to have ignored the fundamental analysis. If you commit these mistakes, then you must not blame anyone but yourself.