Thursday, 3 March 2016

Forex Training – Technical Analysis and Indicators

Posted By: Sifiso Nkwanyana - 04:10


& Comment

Before starting your trading career, it’s important to go through the proper and thorough preparation for it. In other words, having the best possible Forex training is essential. The importance of technical analysis and technical indicators cannot be overstated, as they are important parts of any forex training.

Forex Training – The Importance of Technical Analysis

The biggest problem a forex trader has to face, regardless of their forex training, is the uncertainty that future brings. After all, being able to predict future price movements is neither easy nor simple. While some may delude themselves with the tingling sensation in their stomach, it will only get them this far. The reason technical analysis is so important is simple. Of all the attempts to "divine" the future (price action), this method has consistently been standing out from the crowd.
Since it is based on actual, empirical data, it can be objectively relied upon as a basis for subsequent action on the market. Technical analysis is by no means perfect, but it is as impartial and reliable as it gets. Unless there is a crystal ball in the vicinity, hard science is all that most traders can feel safe with. And since hard science is a good thing to have in a forex trading tutorial, this is the perfect topic at this point in time.

Technical Analysis as a Trading Tool

When it comes to forex trading in particular, technical analysis is an indispensable tool for predicting future price activity, due to the overwhelming amount of data that actually work in its favor. The more data, the more accurate and reliable technical analysis becomes. Thanks to the nature of forex markets, there is never a shortage of charts, trends or indicators. Of course, how one interprets this technical analysis is also important, and there are many theories on this subject. However, for the purpose of this forex training course, we will focus on the general overview of technical analysis and indicators rather than going into details.

Downsides of Technical Analysis

Forex training aside, the sheer number of major players on the market as well as the resources invested into this subject make it almost impossible for an ordinary trader to exploit a price inconsistency and earn their income in this manner. This is why people turn to technical analysis – because it focuses on general trends rather than trying to identify a singular price discrepancy that will last a fraction of a second at best.
Nevertheless, being able to predict a future trend and adopt a strategy that will exploit it on a larger scale can be done, especially with some forex training. Bear in mind though, that technical analysis – as impartial as it may be – is only as effective as the one who uses it. Furthermore, something can always be omitted, inadvertently or otherwise. Factoring every single aspect can prove tricky, if not downright impossible. This is why nobody has fully succeeded in deciphering the patterns that may or may not even be real (for all we know). The fact is that precedents have happened in the past, and they will happen again. Even the best technical analysis does not what the future holds; at best, it can hazard a guess as to what should happen, based on past experience.

Technical Traders vs. Everyone Else

This aspect of forex training is especially important for traders who rely on technical aspects of the market rather than the feeling in their gut. If the price is going to trend, they need to know in which direction and for how long. If it is going to stay within a certain range, it also prompts questions concerning the sustainability of that situation. Like it or not, the previous experience is all there is to go on when trying to predict the future price developments – either that, or explore the exciting back alleys of insider trading, if you think you can.
Still, the basic forex training wisdom suggests that previous levels of support and resistance have to be considered when factoring these things, especially when it comes to the more popular currency pairs, like the EUR/USD. A sound technical analysis can indicate whether the currency pair will remain in a certain range or not, so the trader can modify his or her trading strategy accordingly, and perhaps profit from the entire venture. Of course you could just go by your hunch, but this is definitely not a recommendable course of action.

Forex Training on Technical Indicators

But how do traders know when to act? This is where technical indicators come in. Of course, how you interpret your technical indicators is entirely up to you and as such it exceeds the boundaries of forex training planned for this lesson. However, it should be said that technical indicators can be an efficient early warning signal, when properly applied.
There are many kinds of technical indicators, and most traders tend to favor one over the other, but the most popular ones include Bollinger Bands, moving average, MACD and others. What they have in common is that they all indicate the potential lucrative opportunities.

Forex Training: Final Words

In reality, there are as many ways to trade the forex markets as there are forex traders out there. The importance of technical indicators and analysis for a trading strategy cannot be overstated, even if the choice is completely arbitrary. Even though nobody knows what the future has in store, technical analysis can at the very least give traders something to watch out for. Technical indicators, on the other hand, can indicate the right time to act, especially when coordinated with support and resistance levels. At the end of the day there is no such thing as the best technical indicator. The only thing traders need to figure out is which indicator works best for them. When everything else fails, rely on forex training and everything will be fine. You can also analyze some of the best Forex trading strategies.

About Sifiso Nkwanyana

Sifiso Nkwanyana is a full-time blogger and Forex trader who loves to explore blogging. He has a passion for helping newcomer bloggers make their blog noticeable and make money. The Main Purpose of this site is to bring reality with a taste of entertainment


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