Learning About Forex Trading: Article No.1 Looks At Forex Technical Trading And Forex Robot Trading

Most Forex traders tend to use and favor one of the two Market prediction methods when working out a market buy or sell position to take a profit.

While technical analysis concentrates on the study of past market action through examining charts from price previous exchange value movement, fundamental analysis focuses on the economic forces out in the world at large which should, or will cause prices to move higher, lower or stay the same. Both systems are used by traders to monitor the market daily in detail however, some of the worlds most experienced Forex traders have developed a Forex robot trading tool to make  effortless and profitable trades through automated Forex positioning, enabling them to spend less time monitoring the market in detail.

Technical analysis involves the critical examination of how one currency has moved against another historically, usually by looking at the movement of trade value between one currency measured against another as shown in a graph or chart for a currency pair. This can be powerful in itself as the chart can reveal major market psychological resistance and support levels for a currency that can show where a currency may have difficulty breaking past a point, in exposure to the current fundamental pressures. For example, if a currency value on a chart attempts to break a price level several times, but continues to fall back and then try again, it can be said that it has a resistance to go beyond that price level and the number of attempts may indicate the level of resistance. (remember – market value changes are very much driven by speculation and price differences are influenced my many factors – some irrational such as the emotions, hopes and bias of people trading in the market.)

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Disparity and lag between these irrational factors and the more rational fundamental changes in currency values create movement changes in value giving rise to a basis for trading and opportunity for profit) Traders look for “double or triple tops etc” or peaks on price levels (and similarly on bottoms for strong price support levels) to indicate a resistance and they know that if fundamental forces are finally strong enough to push past the price resistance barrier, then the price can spike up rapidly (or down), like a pressure being released. Traders will try and predict how far the spike may go or how far onward trading may take the price above (or below) an old resistance level.

In times where economic conditions are stable, currencies tend to trade in a value band and gradually move up (or down).  Depending on how stable the currency pair is will determine how far back the trader will have to look with the chart of currency exchange value to identify the historic direction that the currency has been moving. From the peaks of price change movement the trader can identify trending lines for indicating the rate and direction of value change.   Knowing where and when to exit the market is the key to profitable trading. The novice can benefit from automated Forex robot trading to do this for them.

Look out for the next article where we will look at what the Forex fundamental trading method is all about.

Thanks for reading and see you again for the next article.

Eric Bray

Trained as a foreign exchange dealer in the 1980′s, Eric  worked in Sydney as a professional forex broker.  Do you have a question about forex trading? Ask Eric at http://www.easyforexrobottrading.com. The author grants full reprint rights to this article. You may reprint and electronically distribute this article so long as its contents remain unchanged and the author’s byline remains in place.

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