Methods to Analyse

Whilst you are likely to just want to get on and begin your trading unfortunately it is not that straight forward. Before you take that path you will need to analyse markets in order to decide what (and how) you wish to trade a particular market. Broadly speaking we can divide analysis into two core components: Fundamental and Technical.

Access our FREE Market Analysis and Education!
 

 

FUNDAMENTAL ANALYSIS

A Fundamental Analyst tries to determine whose economy is thriving compared to whose is struggling. This is achieved through analysing data and reports whilst having an understanding of the reasons to how and why such data impacts supply and demand of a stock or currency. The simplest way of looking to this is through the belief that if a country is healthy then the demand for a currency should go up, taking the local currency up with it. This is simply because foreign investors will bring their money into the country in hope of capitalising gains from the healthy economy, which increase the demand and value of the currency.
 

TECHNICAL ANALYSIS

Technical Analysis is the study of historical price and volume data (usually in the form of charts) in order to try and anticipate future direction of a market. Technical Analysis believe that all relevant information is included in the price, therefore all that is required to assess the relationship between supply and demand is a price itself.

The links below will provide you access to a series of comprehensive Technical Analysis education which also includes over 4 hours of video.
 

Access our FREE Technical Analysis guides!

 

TECHNICAL ANALYSIS versus FUNDAMENTAL ANALYSIS

 
We could look at the comparison as price versus value:
  • Technical Analysts look at price
  • Fundamental Analysts look at value

If Fundamental Analysts looks at the reason behind past or potential market moves, then Technical Analysts look at the effect of market moves.

They both agree on the principle of supply and demand. However a Technical Analyst does not need the reason behind the change in supply and demand to see that a change has in fact taken place – as they can visually see this change in the form of trends on a price chart.
 

COMBINING TECHNICALS WITH FUNDAMENTALS

Some analysts choose to use both forms of analysis in tandem, whereas others (like myself) decide to specialize in one or the other. There is no right or wrong answer as to which you should choose, as long as you are comfortable using a particular method and can make an objective trading plan using your chosen methods.
 

NEXT

Contact ThinkForex

Australia

Level 11, 636 St. Kilda Road.

Melbourne, VIC, Australia 3004

AFSL Number: 424700

ABN Number: 69 158 361561


AU: +61 3 9093 3400

Email: support@thinkforex.com

UK

TF Global Markets (UK) Limited.

2 Copthall Avenue, London, EC2R 7DA.

FCA Number: 629628

Registration Number: 09042646


UK: +44 203 514 2374

CN: +86 400 990 8300

Proud Supporter of:
Proud gold supporter of the Champion for Children Program - Unicef
Follow us