10 TECHNICAL ANALYSIS
technischeanalyse1
Technical analysis is the study of pricing in the past on the basis of a ruling about the future. Many forex strategy is based on obtaining information forex using technical analysis. Some traders do not even look at forex charts, only to technical indicators.
Three religious fanatics who were wrong were found to have arrive at the pearly gates and be received by Jesus personally. The Messiah floats lightly in the air, surrounded by a slightly stronger than a thousand suns.
"What was your sin? Tell me and I will forgive you. " He says to the first fanatic.
The Jew humbly kneels and says, "I thought you was a fake and that the true Messiah yet to come."
Jesus spreads his arms and says: "From today shalt thou be with me in paradise."
"And you, what was your sin? Tell me and I will forgive you. " He says to the second.
Even the Muslim humbly kneels and whispers, "I thought you only a prophet and not a messiah."
Jesus spreads his arms again and forgives him.
"And you?" He says to the last. "What was your sin?"
The currency trader takes a tape measure from his pocket, walks up to Jesus and measure the length of his feet to his head, and then from his navel to his head. Jesus, too surprised to react, let it happen.
After the measurement currency trader type some numbers into his calculator and said, 'You are not the messiah, because the relationship between your navel and your head against your entire length is 0.58 and not the fibonacci phi from 0 , 62. You therefore does not meet the gold standard where the Messiah would have to meet. "
The Bulls & the Bears
Currency trading is about predicting the market. No trader has always been right, but the successful trader knows his losing trades within the limits and they are winning trades to maximize. This is the essence of successful trading on the forex market.
In order to secure an accurate prediction as large as possible, the trader have two analytical tools: the fundamental and technical analysis, or analysis of news and analysis of price behavior in the past. Both instruments, however, be ruled by the same all-important factor: people.
Because prices in the currency market are created by human behavior. The outcome of the struggle between one group (who bet on decline) and the other group (who bet on rising). Or:
Total stakes Group A> Group B = total bet prize goes towards expected group A.
In currency trading, these two groups often called Bulls and Bears.
50 euro free markets
Bulls: Traders bet on rise in the base currency against the quote currency. So when the currency pair EUR / USD for example, they take a long position (buy euros / sell dollars).
Bears: Traders who bet on the decline of the base currency against the quote currency. In the example above, so they take a short position (sell euro / U.S. dollar purchases).
It is the eternal struggle between the bulls and the bears that price changes are determined. Prices are not due to news, government decisions or movements on charts, they are formed by the reaction to it of the participants in the forex market. This understanding is half the war.
The cause of price behavior on the forex market
Price behavior is not entirely logical, but not completely illogical. If prices are perfectly logical would develop everyone would always agree logic shows indeed no place for different outcomes. But if price behavior was completely illogical, then there would be at the price of currency's no arrow drawn. And that's certainly not the case. because people-at least for a part-rational beings who make rational calculations.
A large part of the price change is achieved by:
1) Comments on the basis of economic reality (multinationals and governments)
2) Forecasts based on fundamentals (traders)
3) Forecasts based on technical indicators (traders)
4) Parabolic scaling (dealers)
Comments on the basis of economic reality (multinationals and governments)
Multinational companies hedge their economic risk because of activities abroad. Hedging means taking two opposing positions, to reduce risk). They act not for possible price changes but on the actual situation on the market, compared with their own economic activities.
Governments sometimes take positions in the forex market to try to track a certain side on the handlebars. This happens less than before (the market is actually too big) but it still occurs. For example, the South Korean government announced in 2008 to 5 billion dollars for the value of the Won to screws.
Expectations based on fundamentals (traders)
News that affects the GDP, the interest rate position, the trade balance or the political situation of a country also affects the forex market. Traders try to predict what the expectations based on the news, so they can respond in a convenient position.
Expectations based on technical indicators (traders)
Technical tools to the market to 'read' in recent years become increasingly important. This is because these instruments are becoming easier to obtain and use for the millions of amateur traders who are joined by the advent of the Internet. These indicators are the focus of the upcoming articles.
Parabolic scaling (dealers)
This sounds more complicated than it is, but is difficult to translate. Further it is discussed in more detail, but where it briefly comes down to is that the dealers are moving in a strong market, by definition, on the wrong side of the line there. For example, if everyone wants to buy Euros and dollars to sell, they sell euros and buy dollars. Otherwise there would be no transactions are closed.
All risks are increased by reducing them to take positions as the course evolves in a certain direction. This 'Double up' strategy is called parabolic scaling. The effect is that they are more rapidly break-even play when the rate is again in the other direction. As a result, and that is why we call it here, is that natural Resistence & support levels are at the points where the dealers break even able to step out.
Parabolic scaling is such an important reason for the strength of the many forex traders use Fibonacci lines.
Price Behaviour in identifying and assessing: Technical Analysis
Technical analysts look at price behavior in the past and try on the basis of statements about the future. Even though there are inscrutable movements in every price development, price behavior is still very much returning to, ie, there are patterns.
Some of these patterns can already be seen by simply daily prices on an xy axis to plot. Note for example, for each trading day the "closing price" (which is by the week, not really, because trading in currency 24 hours a day passes) in the Netherlands (16.00 noon) for the EUR / USD and watch the course in develops a few months.
See for example the price of the EUR / USD from 2006 until June 2008.
There is clearly an upward trend. Trend Breaks in the longer term are not very common, so simple reasoning is it for a long term trader to secure a long position EUR / USD to take (so buy euros, dollars sales) or the trend. Incidentally, this is it (a lot) versimplificeert reasoning, but it shows that watching rate movements can provide valuable information for taking profitable positions.
Technical analysts look at many different ways to the development of the price. Roughly there are 3 ways to distinguish:
1) The development of prices over time (so 'simple' mapping prices)
2) The development of this significant development of the price. Many of the best / most used technical indicators socalled 'derivative' indicators: They look at the evolution of development. An important reason for their popularity is that they are fake developments' get there easily break and thus a clearer picture of the market situation. There are also indicators that look at the development of the evolution of prices. Smile (derivatieven of derivatieven so) reminds me of poker where you must learn to think what your opponent thinks you think he thinks about your hand.
3) Different time units. How the course is in the last hour has developed a very different picture than what about the last 24 hours or 30 days before. Analysts look at different time units, which also differ from the period in which they occurred (intraday, day, short, etc)
An assessment of the market supported by technical and fundamental indicators indicators has a much greater chance of success and thus profits. The players on the (forex) market in recent years increasingly orientate on technical indicators, which means that part of the price also a self fulfilling prophecy is, everyone reacts a certain way for a development because everyone's prediction same indicators used. For that reason alone it is very important to know how technical analysis is achieved and what is going on indicators used.
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Forex is simple follow the trend and you will rich.
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