3 Principles technical analysis Forex

Forex Technical Analysis (also known as a foreign currency or exchange rate), which is a & # 39 is a widely used methodology for trading currencies in the world, based on three main principles. The first principle – the action in the currency market reduces everything. The actual market price – is a reflection of everything that is known to the market, which may possibly affect the price movement. Pure technical analyst is only concerned about the price movement and not the causes of any changes.

Second, prices move in the trend. The price can move in three directions, that is, they can move up, down or sideways. Once a trend in any of these areas acts, it is normally saved and will create a trend. Technical analysis is also used to determine the patterns of market behavior that have long been recognized as genuine. Typically, this behavior behave in the same way as before, until you are able to recognize and explain what they are. They have proved their consistency in predicting future steps. If you can correctly identify patterns and diagrams that further price movement, you will be able to limit losses and maximize your profits.

And thirdly, history repeats itself. Technical analysts believe that investors collectively repeat the behavior of investment behavior. They tend to act and react in the same way to different types of stimuli, as economic data or other news. Because investor behavior repeats itself so often, you can recognize the well-known market model for analysis.

Therefore, a trader, who & # 39 is a pure technical analyst is not concerned about the news on the market. He used the model charts for the market to take into account the news and acted accordingly. However, although widely used, there are some shortcomings in this trading methodology.