By itself, the foreign exchange market was originally created to ensure banking operations between different countries. Forex is a market, or rather, one of its components, enabling traders to make a profit by selling and buying currency.
Like any market, Forex is a clear mechanism that obeys its own rules and laws. The task of the trader is to predict the price movement for a particular currency pair.
What affects price changes
Different factors influence quotes. There are a number of activities by which experienced traders analyze in which direction the price will move. Forex market analytics and forecasting is one of these tools.
Various events constantly occur in the world that affect the movement of market prices. The market can be very significantly pushed in one direction or another by the leaders of banks and well-known politicians, and the forecasts of the gurus and experts of the foreign currency market.
Often such information is specially distributed to weaken, strengthen or put pressure on some currency.
Stock analytics
Many analysts work on financial exchanges who regularly publish their foreign exchange market analytics. Accurate forecasts do not always happen, and they usually rely on available data on the international situation, economic calculations and trends, as well as a variety of trading indicators.
The profession of exchange analyst has recently become quite in demand. Such specialists process various data and information available to them, draw invisible connections between them and make their forecasts. Of course, their statements are not unfounded and often turn out to be true, however, so that thoughtless trust and following others does not result in a loss of capital for a trader, you should, in addition to studying the forecasts of analysts, rely on your own knowledge and try to make your own forecasts.
Analysts are not always right and situations often happen when, due to incorrect interpretation by the stock analysts of the available information, traders go the wrong way. And sometimes this is done deliberately, in order to influence a certain currency pair.
Among the professionals involved in analyzing the Forex currency market, there is a saying: "If you do not know what to say, say that the current trend will not change and will continue." That says a lot ... Therefore, in order to trade profitably and without unreasonable risks, each trader is simply obliged to learn how to make his own forecasts and build a trade based on them.
Thus, it is recommended that traders treat analysts' forecasts as certain trading signals, but enter into transactions only by listening to them, but relying on their own conclusions.
Forex analytics
When compiling analytics and forecasts of the Forex currency market, a comprehensive analysis is used. That is, everything that is possible is the trends that have developed in the world community, events and market news, signals, indicators, trends, fundamental knowledge and technical analysis data. All these indicators have clear relationships among themselves. Do not neglect the news of the exchange, conducting an analysis of the Forex market. This is also very important.
Forex market analysis consists of several parts:
- Technical - it is based on mathematical and statistical data. Composed according to its strict rules, where the basis is the history of price fluctuations. These are various trading figures, trend lines, charts and signals.
- Fundamental is already an analysis of political and economic events, some other aspects of public life that can influence quotes.
- Fractal is a relatively new direction in determining future Forex price fluctuations. The meaning of fractal analysis is that they proceed from the postulate that the future price depends on its past values. Well-known trader Bill Williams used this method in his trading and achieved dizzying success. The relevant indicators are part of the Metatrader trading terminal.
- Wave - this method is more complicated than the rest and is based on Elliot waves, which make it possible to predict sufficiently accurate marks for entering and entering the market, to predict a trend change in the near future, and also to assume the duration of the existing price movement. Many traders consider this method the most powerful and promising.
It is up to everyone to decide which analysis method to use and what to pay attention to a greater degree, since, as you know, a trader trades at his own risk.
Types of Analytics
- From 1 day to 1 week - short-term analytics. Most analysts publish their forecasts before the start of the trading day. This helps to determine the most profitable points for entering and entering the market, and to monitor the trend. Fundamental calculations in such forecasts are almost not taken into account.
- From 1 week to 1 month - medium-term analytics. This is a body of information about what important events took place in the political and economic arena during this period, what major financiers made statements about, and which banks held meetings. Based on all this information, along with technical analytics, traders usually make most decisions.
- From 1 month to 1 year or longer - long-term analytics.
Traders are usually guided by that analysis of the Forex currency market, the accurate forecasts made on which come true most often. Everyone chooses the one that is most suitable for their chosen trading strategy.
Analytics reviews. How to interpret information correctly
Finding various information about events in the world is not difficult. It is much more difficult to correctly understand and interpret it, as applied to trading on the exchange.
First of all, relevant analytics of the foreign exchange market is located in the trading terminal, which is used by all traders. These are charts, indicators - their analysis helps to understand the trends of the trading trend. In addition, each professional trader develops his own trading strategy, which, together with a set of various tools, helps them make the right decisions during the trading session.
There are always sections on broker's websites that contain currency market analytics from full-time analysts and various tips on working with indicators and signals.
Where else to look for information
Where to looking for? Among:
- stock brokers;
- portals on economics;
- analytical organizations and institutes;
- experts.
Do not neglect the print media, they publish a lot of useful information for the trader. Regular viewing of popular Internet resources in the "Economics" section, visiting thematic portals about Forex trading. A novice trader does not have to be an analytics guru without even knowing the intricacies of exchange trading, sometimes it’s enough to just notice something or pay attention to someone’s professional opinions or new trends.
When analyzing the foreign exchange market and compiling your own quotes forecasts, you must first learn the terminology, understand what indicators affect the movement of prices on the exchange.
There are basic, sometimes obvious facts that lead to the growth or fall of the national currency. Any negative in the state leads to a weakening of the currency.
The better the trader understands which events (or, conversely, which events have not occurred) can affect the prices of the foreign exchange market, the better his trading progresses, and the more chances he has to make regular profits, and not lose his money.
Using analytics in trading
When analyzing the foreign exchange market in a given situation or currency pair, one should definitely listen to the opinion of professionals, however, conclusions should only be drawn independently, carefully comparing all known facts, and never trusting someone else’s opinion completely. Only then will it be possible to achieve success.
To understand how to use analytical forecasts and data when trading, you can consider a simple example.
Trading on the pair USD / JPY
The pair's value is around 112.80.
Having examined the price movement chart for this currency pair, it can be seen that the price for it has fallen by more than 300 points over the past week. But this is not enough.
A meeting of the Bank of Japan is scheduled for next week. Credit policy issues will be addressed. Based on the results of this meeting, it will be possible to understand what the currency pair expects.
How is the forecast made
1. Since Japan is a country whose economic aspirations are aimed at export, the competitiveness of goods is accordingly important.
This means that raising the price of state currency is not desirable. This suggests that, most likely, the cost of JPY should not increase.
2. After conducting a technical analysis, we can conclude that the support for the pair is at this point, which means that the price can push off from it and go up.
So, a trader, having various information for analytics of the foreign exchange market, gets a chance to make a profit by trading on this pair.