FOREX Technical Analysis

Introduction

In FOREX Technical Analysis we are not trying to forecast the market. Rather we are aiming at decoding the market by viewing it from different aspects. In my FOREX Trading Course “7 Steps To Profitable FOREX Trading” I make a nautical analogy that I will expand upon here. If you are trading without technical analysis, you are sailing without a crew, compass and a nautical chart. It needs an enormous amount of experience to be able to navigate correctly in this way. Naturally one could only navigate in known waters. It is, however, possible. But why make it difficult and excruciatingly time-consuming?FOREX Technical Analysis

FOREX Technical Analysis gives us solid reference points, enabling us to understand approximately where we are. Judging distance or knowing where you are at open sea is very difficult because of the absence of reference points. With the help of reference points (land masses, light houses etc) we can map out on our nautical chart where we are, our destination and how we will get there. The same is true for technical indicators, the help us navigate to our final destination, a net profit.

Of course it is not that easy, any sailor knows that there are many unknown factors that can severely interfere with your laid out route. The weather (or market conditions in our case) can change fast, putting you in a precarious situation (this is where Trade Management enters).

Indicators are just that - indicators. They indicate where we are on the chart giving us information about a different aspect of raw price action as seen through that particular indicator. Different indicators return different aspects. Remember though that all of them are using the same source, raw price. There is only so much information you can extract from it. Keep this in mind when reviewing each indicator.F