What is Forex and How to make money with Forex 4

What is Forex and How to make money with Forex 4

Forex fundamental analysis and forex technical analysis

In my earlier posts here on Ideas on How to Become Rich, I covered fundamental analysis and technical analysis. It is interesting and important to note that fundamental analysis and technical analysis are important to forex trading and making money using currency exchange as well. What is fundamental analysis and technical analysis in the context of forex?

Fundamental analysis in the context of forex means that someone looks at the macroeconomy of a country and the target currency; looks at the political situation of the country; national unemployment; tax policies and all the stuff like that in order to find out and measure the effects that these events and policies and situations will have upon currency values. In other words, the forex trader who uses fundamental analysis is using the same concepts and ideas to make money as the investor who invests in the stock market from the investment paradigm of fundamental analysis as well. The fundamentals of a company will affect the stock price ultimately; the fundamentals of a country will affect the currency values, ultimately, and that is what the forex trader is looking and watching out for in order to make money. At the same time, it is important to note that a currency does not just reflect the fundamentals, and there is an important role played by perceptions, ideas, rumours and anticipations and expectations of market participants.

Many other forex traders use technical analysis instead, which looks at values and movements of the currencies, and ignores the fundamentals of the country's economics and indicators that fundamental analysts take so seriously. The investor assumes that the movement of the currencies considers most of the factors inside it; movements of prices have causes and effects; history repeats itself. The main thing is that the technical analyst makes no forecasts way in advance but looks at the trends and prices, just like a technical analyst for stocks does his business, in order to make money.

Perhaps a cross comparison might help budding forex traders or forex beginners seeking to improve their knowledge, so do visit

technical analysis on Ideas on How to Become Rich

and

fundamental analysis on Ideas on How to Become Rich

to build up your investment and technical knowledge. More to come here in future posts on forex and how to make money with forex! Stay tuned here.