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Two Types of Market Analysis

There are at least two types of analysis that a trader can use in order to make a correct buy or sell decision on a currency paper. Developing your skills in at least one of them could make you an extremely profitable trader. And these two types of analysis are fundamental and technical analysis.

There is a never-ending argument about which type of analysis is better, but the truth is that both can allow a trader to make money and it’s important that a trader understands them both, and makes a decision about which is best for himself so that he can become a top trader. Let’s take a look at each one of them:

Fundamental Analysis

Fundamental analysis is based on looking at the market’s economic, social, and political factors that affect its prices. It also looks at the economy or the currency of the country itself. In other words, fundamental analysis is looking on a case-by-case basis at which economies are growing and which ones aren’t. This type of analysis allows you to gauge how strong an economy is and how different factors will affect it and its currency.

Technical Analysis

Technical Analysis is the analysis of the price movements to predict future price movements. More simply said, it’s analyzing chart patterns to predict future chart patterns. The idea is to understand the historical movement of prices based on these graphs and to gain insights from them to then apply to the current chart patterns. This way we can capture big movements on prices and make profits. It also helps us determine how to look at risk and how much risk to take on.

Which one is better?

As we said before, both are important and you need to understand both. You can be an expert in only one and be profitable but will help way more and your trades will be accurate if you get to become an expert using both types of analysis.

Demar Ruiz
Business Developer
druiz@tvmarkets.com

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Tradeview Ltd. is not a portfolio manager or an investment advisor. This Market Report is for informational purposes only. Any statements made or opinions voiced in this Market Report do not constitute investment advice. The Tradeview Ltd. Market Report does not constitute a solicitation to buy or sell in the financial markets. Although the information contained in the Market Report comes from trusted sources, Tradeview Ltd. is not responsible for guaranteeing the accuracy, timeliness, completeness, or fitness of such sources. Tradeview Ltd. shall not be responsible for and disclaims all liability for any losses which may be suffered from access and use of the contents of the Tradeview Ltd. Market Report. Trading any financial instrument on margin, using leverage or otherwise involves considerable risk. Therefore, before deciding to participate in any style of trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney, accountant or other professional upon whom you rely for guidance as to the appropriateness of an investment in any style of trading is recommended.

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