5 Advantage of Technical Analysis in Forex Trading

1. 5 Advantage of Technical Analysis in Forex

2. Index • Technical Analysis • Scope of Technical Analysis • 5 Advantages of Technical Analysis 1. Trend Analysis 2. Entry/Exit Point 3. Provides Early Signal 4. Quick and Less Expensive 5. Provides Lots of Information

3. Technical Analysis • Technical analysis includes the study of chart patterns, candlesticks, moving averages and indicators. • It is easy to apply in any market in which the raw data (volume and prices) is available.

4. With the help of technical analysis, it is easy to understand the sentiments of the market and to forecast the prices, without looking at the fundamental factors of a particular currency.

5. Scope of Technical Analysis

6. The Scope of Technical Analysis • Technical analysis is used by forex, equity, and commodity traders, to determine the short term as well as the long-term trends of the market. • The scope of technical analysis is rising every day, as more and more people are trying to learn the skills of technical analysis to earn the good returns.

7. 5 Advantages of Technical Analysis

8. 1. Trend Analysis • The biggest advantage of technical analysis is that it helps investors and traders predict the trend of the market. • The uptrend, downtrend, and sideways moves of the market are easy to predict, with the help of chart analysis.

9. 2. Entry/Exit Point • Timing plays an important role in investing and trading. • With the help of technical analysis, traders and investors can predict the right time to enter and exit a trade thereby enabling good returns.

10. Chart patterns, moving averages, candlesticks, Elliot wave analysis, and other indicators are useful for traders to make entry and exit points.

11. 3. Provides Early Signal • Technical analysis gives early signals and paints a picture of the psychology of investors and traders regarding what they are doing. • The price volume analysis indicator the movement of market makers and the activities related to a particular market.

12. Another advantage of technical analysis is that it gives an early signal when it comes to the trend reversal.

13. 4. Quick and Less Expensive • In currency trading, technical analysis is less expensive as compared to the fundamental analysis and there are so many companies that provide the free charting software. • Technical analysis gives a quick result for traders who use 1 minute, 5 minutes, 30 minutes, and 1-hour charts.

14. For instance, the formation of a head and shoulder on 1 minute and 5 minutes chart gives the fast results, as compared to the daily chart.

15. 5. Provides Lots of Information • Technical analysis helpful for the short-term trading, swing trading and long-term investing. • Technical charts provide a lot of information that helps the traders and investors build the positions and take trades.

16. Information like chart pattern, support, resistance, the momentum of the market, volatility, and the trader’s psychology are some examples of types of information provided by the technical analysis and used by traders in the Forex market.

17. Thank You