Technical analysis.

Attempts to trade at random very quickly end in drawdown or loss of the deposit, after which the novice trader thinks about how to predict price movements using a scientific approach. methods of technical analysis of the Forex market can help solve such a problem .

Technical analysis is a method of assessing the current market situation based on the analysis of statistical data on the history of price movements of a currency pair and the volume of transactions performed.

Base of technical analysis of the Forex market.

The main source of historical data for analyzing the foreign exchange market is the trader's trading terminal .

Namely, a chart of the selected currency pair or other trading instrument. In the terminal, you can evaluate how the price behaved over the course of an hour, day, week or even a year, depending on your goals and objectives. Thanks to the use of this program, you can find out the minimum and maximum points , which are useful for placing stop orders.

Determine the trend dynamics, its direction and obtain other necessary data. An additional source of information can be reviews on the movement of currency pairs, which can be found on almost any of the Forex brokers’ websites.

Goals.

As a rule, a correctly chosen goal is already half the success, so the purpose of technical analysis on Forex is to obtain data to make a trend forecast. You must identify the existing trend and identify all its properties, such as the strength of the movement, volatility, the magnitude of the correction and the Forex patterns present.

In the future, the data obtained is used to make a trend forecast, determine the direction of a future transaction, and the parameters of take profit and stop loss orders.

Technical analysis tools.

Since the main process takes place on the chart of a currency pair, most technical tools are designed to work in a trader’s trading terminal.

First of all, these are, of course, technical Forex indicators ; they allow you to perform most of the constructions and calculations automatically, thereby saving the trader’s time.

In addition, you can build various levels, lines, waves and graphic figures in manual mode.

The bottom line.

If we consider the practical application of all of the above points, we can draw up the following work scheme based on technical analysis:

• Determine the existing trend - for this we analyze the minimums and maximums on the working time frame, or use a special indicator.
• We assess market volatility , thereby identifying the approximate profitability potential of the transaction.
• We analyze the magnitude of the trend correction, and use the obtained data to search for entry points into the market and set stop orders.

Implementation of Technical analysis allows you to significantly increase trading efficiency, because the price of an asset includes everything - volumes, supply and demand, as well as many other factors. You can find additional information on this topic in the “ Technical Analysis ” section.