Nothing compares to the feeling of catching a big market move, be it a large trend or a quick scalping trade. To catch price movements and capitalize on them, you need a decent trading analysis that allows you to timely detect and react to ongoing price changes. There are several ways you can enhance your market analysis and increase your trading accuracy to make profits, and we are going to explain and list most of them in this guide.
The financial trading analysis explained
Traders employ numerous tactics to analyze markets and define where the price is expected to go most likely. This usually includes combining technical analysis with fundamental analysis. Technical analysis is a type of financial analysis where traders use various technical tools such as technical indicators and chart analysis tools to make sense of ongoing market dynamics. It essentially refers to analyzing historical price data to forecast or detect ongoing price dynamics. Unlike technical analysis, fundamental analysis tries to analyze macroeconomic and sometimes even geopolitical data to predict their influence on certain asset prices. Traders mostly use technical analysis on their trading platforms by applying various technical indicators and chart analysis tools. Fundamental analysis typically focuses on longer-term price dynamics, while technical analysis is more short-term. This is why technical analysis is wildly popular among traders, especially beginners. However, the power of fundamental analysis can not be underestimated.
Mastering technical analysis
Technical analysis helps traders define where the price is moving to follow it for profits. The important thing here is that traders are not trying to predict anything, they only want to detect what the price is doing now and follow it to catch profits. This is very critical to remember, as traders are not there to predict the future and be right all the time, they only need to detect what the price is doing and react to make profits.
Technical indicators
Technical indicators are the bread and butter of Forex trading technical analysis and are wildly popular among all financial traders. These indicators can be used on trading platforms. The two most popular trading platforms for financial trading are MetaTrader 4 and 5. MT5 is the latest trading platform and offers plenty of advanced features to fully analyze the price in every way possible. The best indicators for the MT5 platform include ZigZag, alligator, and others which allow traders to clearly detect trends and time their entries. MetaTrader 5 also supports custom indicators and trading robots, allowing traders greater flexibility. Anyone who has programming experience can develop their own indicators or search through thousands of indicators online because of the platform’s large trader base.
Incorporating fundamental analysis
Fundamental analysis is the complete opposite of technical analysis, as it does not rely on charts and historical price performance to forecast future probabilities. It employs economic analysis of the asset and tries to define how the market will react to major economic news releases like inflation, interest rates, GPD, and many others. Fundamental analysis allows investors to anticipate medium to long-term price movements, while technical analysis focuses on more short-term dynamics. Despite their difference in method and time frame, combining technical and fundamental analysis is the most effective way to increase trading accuracy and supercharge profits. The best way to track all economic news releases is to use economic calendars, which are available freely online. With the economic calendar, traders can anticipate times when markets can become highly volatile and plan ahead to control their risks. One popular way to combine technical analysis with fundamentals is to analyze economic news to define the major price trend direction, and then use technical analysis to find the best entry points.
Selecting the right trading platform
Trading platforms are software allowing traders to access financial exchanges and quotes for financial instruments. Trading platforms like MT4 and MT5 are provided by brokers, middlemen between traders and markets. Traders must rely only on regulated brokers to ensure a safe trading environment. Selecting a trading platform is very important for financial trading, as advanced platforms offer all important features to analyze markets and control risks. Traders also need to familiarize themselves with these platforms, and it is crucial to select a platform that has all the necessary features and is widely supported by regulated brokers. MT4 and MT5 fit this criterion perfectly, and they also have large communities, which means thousands of free indicators and abundant educational resources.