For those who are aspiring to start forex trading in South Africa, there is something very important that should be borne in mind - trading without planning is akin to gambling. Online trading is an activity that involves traders speculating about the market and its ongoing trends and utilizing the same to place informed investments. This requires traders to understand the charts thoroughly and discern the trends before placing a bet. This can be accomplished by analyzing the charts and learning about the price action.
Types of Forex Analysis
There are two ways in which traders can analyze the market and make their position. The two types have their relevance on different time frames and are influenced by different factors.
Fundamental Analysis: Fundamental analysis is the process in which traders use fundamentally market altering factors such as events and news to read the behavior of the forex trading market and discern its future trend. Traders in South Africa that engage in fundamental analysis usually use news such as financial updates, government policy decisions, GDP figures, etc. to predict where the market could be headed. Looking out for cues that influence the market and using the same to discern the direction currencies would take can help traders place open positions that may react positively to the news and thereby bring profits to the traders.
Technical Analysis: Technical Analysis, as the name points out clearly, refers to the type of analysis in which traders use technical factors that influence the flow currencies in a market. These are factors that usually reveal insights on trader psychology and currency logistics in a market. They are highly relevant in short-term online trading as they usually follow trends that get replicated in every market cycle.
Both these analyses have their significance in forex trading as they suit different trading styles. While Technical Analysis is suitable for traders looking to engage in short-term trades such as Scalping, Fundamental Analysis is used for long-term trading where market factors dictate the flow of the currencies. For novices who are looking to take up forex trading in South Africa, partnering with reputed brokers like WesternFX can help them master both these types of analysis and use them to good effect in trading.
