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Types of analysis on the forex and stock market with its types and full description

Types of analysis on the forex and stock market with its types and full description

Every day, the foreign exchange market, and the stock exchange as a whole, attract more and more people. From the very moment of the appearance of trading in currency pairs in the form familiar to date, the turnover of trading on the stock exchange has been continuously growing

Forex displaced the stock sector from the first place, and then completely exceeded it several times. Now it is already trillions of dollars per day, and every year it becomes more and more - by the beginning of the next decade, it is expected to reach 10 trillion.

Along with this, the most popular methods of analyzing the stock market, which were previously known to a fairly small number of people, also came to the masses. In order to succeed, and in the case of forex, this means making money, you need to learn to understand what is happening. As a rule, a beginner who has just come to the stock exchange and looks at the chart comes to one of two conclusions:

  • "Everything is completely incomprehensible here, some kind of chaos of fluctuations." This impression begins to intensify after the trader tries trading on a demo account. It seems that the market has decided on the direction, you can enter into a deal. But immediately after the order is opened, the price begins to move in the opposite direction. Many people have thoughts about a conspiracy, drawn quotes and dishonest behavior of the broker. Almost everyone goes through this - it's easier to find the culprit than to admit their own limitations in knowledge. This is normal psychology, but at this stage, those who are not ready to learn, learn and analyze the forex market are eliminated.
  • "Everything is very simple here, here it was necessary to buy, and here to sell, now I will start earning." At first, indeed, there may be an erroneous impression that the market is very simple, all the reversals are obvious and you only need to recognize them. It is good if the next stage is still a demo, and not a real account, since the scenario will be the same as in the previous paragraph.

If you look at the minute chart, you really might think that the fluctuations up and down have no consistency, logic and meaning. In general, it is about right, because everything that happens within 5-10 points is nothing more than the usual market noise, largely caused by a significant number of automatic trading systems.

Simply put, Expert Advisors are trading programs that perform strictly specified actions. They create this array of multidirectional movements. Therefore, it is logical to assume that it is simply pointless to analyze the forex market on small time frames, you can only do this if you have the appropriate experience, and for this you need to watch the development of events live for more than one year.

For example, a long candle that appeared on the news ultimately looks the same way, but all the time that it was formed, its shape could change dramatically, giving contradictory signals. The purpose of stock market analysis is to minimize uncertainty and develop precise rules and algorithms for trading.

The ultimate goal of all forex market analysis activities is to create a trading system. This can be either a completely in-house development, or a compilation of the most suitable analysis tools for a trader. For example, there are trading systems that have been working for a very long time - a well-known turtle strategy for experienced traders.

It was developed many decades ago, it is extremely easy to understand and trade on it, demonstrates good profitability and at the same time implies low risks. The secret is simple - this is long-term trading, in which the forex market analysis is carried out on a daily chart. Trading on it, you will not be able to do 5-10% a day, it's good if 20-40% a year comes out, but there is no hassle, sleepless nights and disappointment. However, this approach is already embedded in the name itself. Slowly, but surely, earnings on the stock exchange are obtained.

Another approach is to combine a variety of elements to analyze the stock market. There is already a lot of people here, sometimes it is impossible to look at the workspace - it is teeming with a huge number of lines, indicators, notes and other things. But if such a vinaigrette makes a profit, then why not use it, the end result is still important, and not how the trader conducted the analysis.

After all, it does not matter to the exchange how we got the correct assumption - by one look at an empty chart or saw a pattern in the movement and readings of an extremely complex trading system. But, as practice shows, traders sooner or later refuse from all excessive complications of analysis, switching to simpler options for analyzing the stock market.

Types of forex and stock market analysis

Now let's highlight the main types of analysis used on the stock exchange, which can be used in different ways:

Fundamental analysis

It is based on the most common logic. It is quite easy to see the connection between what is happening in the global economy or the economy of a single country and how it affects the quotes of various exchange instruments. The analysis involves identifying relationships, getting acquainted with how it is customary to interpret certain changes, studying examples of market reaction to certain events.

However, the foundation is not suitable for everyone - there are a lot of all sorts of deviations in it, and analysts, especially those who are not very knowledgeable about the topic, will always find, albeit crooked, but still an explanation for why the market reacted quite differently from what was supposed according to the analysis of the forex market. This introduces a fair amount of uncertainty. This usually continues until the trader himself begins to understand what's what, how to trade after publication, how to prepare for it and what to do if everything went completely wrong as planned. That is, the presence of a plan B.

In this area of stock market analysis, experience and the ability to analyze, search for information are extremely important, and it is also necessary to spend really a lot of time to keep up with all the news. After all, sometimes it happens that just one comment from a high-ranking official of a state is enough for all markets to start moving quickly, and in different directions.

Technical analysis

In this type of analysis, there is already a guideline for working with the schedule itself. To some extent, fundamental can be called humanitarian, and technical - mathematical. It actively uses methods to search for patterns in price behavior based on available data. That is, you can select a template, make a graphical or numerical description of it and then apply it in trading. The technical analysis on the stock exchange itself can be divided into several more subspecies, which are quite different from each other:

Indicator analysis of stock markets

This is usually some kind of mathematical sequence of actions in the processing of price data over a period of time. For example, you can calculate the average value of the price for the last 100 bars, see how it changes - increases or vice versa, decreases. There are a huge number of such analysis methods, there are classic indicators that have passed the test of time, and there are also thousands of author's developments created by enthusiasts both free of charge and in the form of a paid product. The same applies to automated trading systems. In general, there are so many tools that it will take a decade to try everything.

Graphical analysis of the forex market

A very easy to learn and extremely effective method of analysis. It is especially suitable for beginners, since it does not require extensive knowledge, all trading is based on comparing what the chart is currently drawing with what is presented in the templates. All figures are divided into categories - some indicate a continuation of the trend, others indicate a reversal. In general, it is probably from graphical analysis that it is worth getting acquainted with technical analysis in general.

Read more: Graphical analysis on forex, stock and cryptocurrency markets

Wave analysis

A rather complex theory, in which there is a huge number of rules, parameters, numerical values. It requires knowledge of at least a basic level, understanding how the market works. Despite the fact that there is a special literature where everything is explained in a fairly accessible language, wave analysis should be taken, perhaps, last of all. Few people manage to build their trading on waves alone, usually it is a combination of different methods.

Candlestick analysis of the forex market

Here, the shape of a Japanese candle is used as the investigated element for analysis on the stock exchange. At first glance, it may seem that this is heresy, but in fact there is a rather large statistical background that allows us to treat this type of signals on the stock exchange with confidence. At least, Japanese candlesticks are considered more than 50 years old, their shape can say a lot, especially if we are talking about a large time frame.

Volumetric analysis

This is a fairly young technique that has become widespread. The analysis of volume indicators can tell when a major player enters the market, in which direction the main movement of capital is going, which levels are of interest. This is a rather difficult type of forex market analysis to understand, but over time, when everything fits in your head, it is quite possible to supplement almost any trading system with it. At least, it will definitely not be superfluous, and many patterns and data can be used as confirmation signals or input filters according to their strategy.


 

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Why investors choose to earn money on PAMM accounts
Why investors choose to earn money on PAMM accounts Earning on PAMM accounts is interesting, first of all, to those who have liquid capital. Money, as you know, should work. And make money. You can, of course, use the good old way and put your savings on deposit. But, alas, decent banks don't need money now ... It's ridiculous to say – a famous French brand with stars flying up on a green background now has 1.5% per annum on deposits in dollars. It's like putting it in a safe for storage… So the alternative in the form of PAMM accounts is very useful now.PAMM account (Percentage Allocation Management Module) – this is a kind of trust management. The name speaks for itself – you trust a Professional to manage your capital. With the development of banking and IT technologies, some convenient functions that were previously unavailable have become possible. For example, the manager now does not need to press 5 buttons and his sixth one if he has 5 accounts in management. All deposits are combined into one pool. Moreover, the size of investments from each investor can be completely different! Profit (as well as loss) is distributed proportionally to the contribution.PAMM technology appeared a long time ago. The investor can observe the actions of the manager in real time. Moreover, there is a function of instant disconnection of a separate account from the manager's management. Each client can individually set the maximum available drawdown level and stop loss size for his deposit. In addition, the bank guarantees that your funds will be available to the manager only for trading operations! Agree, this is important!In addition to the trading platform itself, the broker provides professional reporting for traders and clients. And also makes payments between project participants.Everything is worked out and reliable. But! There is a big "but", which I, as a professional and just as an honest person, cannot but say. Earning on PAMM accounts is an activity with a fairly high degree of risk. This is not a safe ... do not believe anyone who promises guaranteed profitability in this case. Or a profit of 100% per month. It's impossible!  Such "managers" have seriously lame money management and risk management.Read more: What is a PAMM accountWe have come to the point where we started – the capital should be liquid. In no case, do not take a loan, do not mortgage real estate and do not use the last money for such an investment.
Jul 22, 2022
IndexaCo
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Forex problems – what is the "Burnout Effect"
Forex problems – what is the \ From love to hate is one step.This is what our conversation will be about today.At the beginning of your trading career, you are burning with the market, you are interested in everything and you are ready to work 20 hours a day. You are full of optimistic hopes, expectations of freedom and financial independence. That's great!But at some point…You are no longer able to trade consistently and profitably. You understand that trading, the market and everything connected with it, are tired of you to hell! There comes a state in which you completely lose interest in forex, feel accumulated emotional and psychological fatigue and physical exhaustion. You don't want anything and nothing pleases you. You start hating yourself, the market and the whole world around you (as if he is to blame for something).Is this condition familiar?I "congratulate" you! You have a "burnout" effect, you have fallen into one of the psychological traps of trading and you have forex problems.If you think that you are alone in your worries, I can reassure you – the vast majority of traders have been through a similar state. Someone had the strength to overcome this trap in forex, and someone gave up trading forever…Personally, during the time of trading, which is almost 13 years, I wanted to quit forex 2 or 3 times and send everything to hell. And the number of guys with whom I have been in close contact and who have given up trading is in the dozens!But it's not that bad.  Let's dig into the depths and try to understand together WHY a trader's emotional burnout occurs, HOW to recognize its symptoms and WHAT to do.To treat the disease, you need to know the reasons that led to it, diagnose the first signs of a possible disease in time and prescribe the right treatment.Read more: Emotions in the market – how to get rid of them?Causes of "burnout"Monotony of trading. Trading is a difficult, boring, monotonous activity. Every single day you, as a robot, do the same thing. Market analysis – preparation of a trading plan – implementation of the transaction. No creativity for you, no flight of fancy for you, no diverse tasks for you. In a word – routine!Market uncertainty. It should be understood that you are not trading currency pairs, but the probability of the occurrence of a particular scenario (the price will go up or down). And no matter how well you do your homework and preparatory work, there is always a chance that your script will not work. And this in turn leads to the feeling that you are not in control of the situation, do not achieve the desired result and as a result – disappointment.Workaholism and isolation. Trading is an individual activity. Forex works 24 hours a day, 5 days a week. And if you follow the market all this time with a break of 2-3 hours for sleep, then you simply do not have time and energy for everything else. Your whole life is spent at the monitor screen, in fear of missing your best deal. As a result, you sacrifice other areas of your life for the sake of trading. Turning into a kind of reclusive recluse, who has only charts in front of his eyes.Pessimism in life. If a negative view of yourself and the world around you incinerates you from the inside and leads you into wild despair, you give yourself an internal installation at the start that you are a loser and you will not succeed. Thoughts materialize, and you get what you were thinking about – another failure.Health problems. Incorrect regime, problems with sleep and chronic lack of sleep, lack of physical activity (you spend the whole day in a chair) sooner or later lead to health problems. And when there is no health, nothing pleases, you don't want anything and you don't need anything.Symptoms of "burnout" at an early stageYou are haunted by the feeling that a new day will not bring anything good, that a new trade (even before the opening of the transaction) will be unsuccessful.It is morally difficult for you to trade. There is a feeling that you are wasting time and effort on a completely useless activity.You feel physically tired. You are deprived of vitality and energy.You are tired of everything you do. The idea that you have to trade again depresses and irritates you.You lock yourself in and stop communicating with your family and friends.You are trying to get at least some kind of buzz from life and begin to "jam", "drink" or "sniff out" problems.Read more: Trader's suicide. Psychology of trading or what to do if you lose on Forex?What to do with "burnout"?Difficult question! And there are no universal solutions. Emotional burnout in trading is dangerous because in the wake of disappointment in trading and forex problems, you can completely ruin your whole life. Therefore, it is necessary to solve this problem in a complex.I will try to outline banal tips that we all understand and know, but do not always follow.In relation to tradingFirst of all, we need to stop trading. Maybe for a week, maybe for a month, or maybe for six months. Then, when you cool down and relax, take a piece of paper in a calm atmosphere and formulate your goals, objectives and expectations:What are your trading goals for the month, for the week, for the day? Mathematics is a strong thing and helps in setting goals perfectly. For example, you want to earn 20% per month from your deposit on forex. Divide by 4 weeks, we get 5% per week. Divide by 5 working days, we get 1% per day.Ask yourself the question, how realistic and doable are the goals you have set? Will you be able to achieve them by following your own rules of money management and risk management?What changes do you need to make to your trading system in order to return to trading and trade without stress? For example, reduce the size of a position, stop or profit to a value that is comfortable for you. Review your market analysis, adjust the definition of entry and exit points and position tracking.Where can you find communication, support and feedback with other traders? As I have already said, you are not alone – 95% of traders have experienced the same problems in forex to one degree or another and have gone through the "burnout" effect.Applied to life in generalLife is multifaceted and interesting, you should not focus on one trade. Set yourself clear boundaries. Every day, set aside a certain time for trading, and then stop and turn off the computer. Set aside time for sports (when was the last time you were in the gym?), get a hobby, chat with family and friends, and just walk in the fresh air. Occupy your brain with thoughts about something good and pleasant, besides trading.Read more: Why do 90% of traders lose on Forex and binary options?And I am 100% sure, then you will not burn in the market and you will not need firefighters!
Jul 20, 2022
IndexaCo
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