Technical analysis (technical analysis).

Attempts at random trading quickly end in a drawdown or a lost deposit, after which the novice trader begins to wonder how to predict price movements using a scientific approach. Technical analysis methods for the Forex market .

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

Forex market technical analysis database.

The primary source of historical data for currency market analysis is the trader's trading terminal . Specifically, the chart of a selected currency pair or other trading instrument.

The terminal allows you to evaluate price movements over the course of an hour, day, week, or even a year, depending on your goals and objectives. Using this program, you can identify minimum and maximum points , which are useful for placing stop orders, determine trend dynamics and direction, and obtain other necessary data.

Currency pair price reviews, which can be found on almost any Forex broker website, can serve as an additional source of information.

Goals.

As a rule, choosing the right target is half the battle, so the purpose of technical analysis on Forex is to obtain data for trend forecasting. You must identify the existing trend and identify all its properties, such as momentum, volatility, correction magnitude, and existing Forex patterns.

The obtained data is then used to forecast the trend, determine the direction of the future trade, and set take-profit and stop-loss order parameters.

Technical analysis tools.

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

These are, of course, primarily Forex technical indicators , which allow for the automatic execution of most constructions and calculations, thereby saving the trader time.

In addition, various levels, lines, waves, and chart patterns can be plotted manually.

The gist.

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

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

Carrying out technical analysis allows you to significantly increase the efficiency of trading, 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.