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Forex: how does Forex work?

2019-12-27 22:24:54

We have made for you a Forex article where our goal is to explain how Forex works

 To know how Forex works, it is important first to know that it is Forex, well, Forex is nothing more than currency trading, because it is a market for buying and selling assets, all related to the financial market, where speculation is worth mentioning of asset prices making short-term movements.

What are the kinds of market analysis that we find in Forex?

 It is important to keep in mind that there are 3 types of analysis necessary to know how Forex works, because these analyzes are: technical, fundamental and of feelings and we will detail it below.

What is Forex technical analysis?

 The technical analysis is simply a necessary tool to know how Forex works, since it consists in the study of the movements of the price, since the information that is collected is handled with this analysis to determine the final price, where the observation of the movement history price and trading conditions play a fundamental role, since the price itself only reflects the market information, and this reveals the performance of a certain operation, so that you understand a little more about this analysis we have left a graph where show some indicators, RSI, Stochastic and MACD, with these indicators lead us along the way to know why it may not be a good time to go out in the euro / dollar.

 The indicators are operations to predict the way in which it can be probable that the market can move and this leads us to give certain descriptions of them.

Indicators to know how Forex works.

 ü Relative strength indicators: these indicators are overvalued elements when it comes to selling or undervalued when it comes to buying, here it is important to make use of several indicators in order to make a good decision when buying or selling, as in some cases are often contradicted when they perform an analysis of some currencies, the most commonly used indicators are MACD, Stochastic, RSI, Bollinger and Williams.

  • ü Trend lines: this indicator shows the upward trends or high points, as well as the downward trend or low points, it is good to be clear that the precise ones that break these marks can indicate the beginning of a change of direction as soon as To the price.

  • ü Convergences / divergences of the moving average: this is an indicator that can be used to visualize early trends and investments.

  • ü Moving averages. These serve to smooth out certain heavy movements where they indicate the new trend in price which crosses the average.

  • ü Inverse patterns: here we find figures, such as shoulder-head, shoulder, roofs and floors-double roof-triple roof and rounded roofs.

  • ü Fibonacci levels: these levels usually indicate a certain continuous movement in the current direction where it has been broken.

  • ü Supports and resistances: these are simple details that indicate the price points where we are told if the market presents difficulties to cross them.

What is the fundamental Forex analysis?

 To know how Forex works it is important to take into account and know everything about the analysis, the fundamental analysis being a relevant aspect, because this is a way of observing the market, for this we have analysis of political, social and economic forces, being These the basis that tends to affect the supply and demand of currencies, it is important to keep in mind that the fundamental Forex analysis shows us the current economic perspectives and future visions of a certain country, making its currency be reinforced, therefore, this It makes the demand for goods and services in that country increase and with that more people want to invest.

The logical thing is to acquire the currency of the country before proceeding to invest, since it is possible that this will rise, so it is important to have knowledge about the macroeconomic data and the world economy, and also know how Forex works, for this usually Be of high interest to have knowledge about the Forex economic calendar.

Economic indicators of the fundamental Forex analysis.

  • ü Budget and trade deficits and surpluses: here it is important to be clear that surpluses indicate the strength of the currency, while the deficit indicates the opposite.

  • ü Interest rates: this is a fairly simple matter and that is why it is vita to know how Forex works, since here we see an extremely simple example and that is that the Euro usually goes up when interest rates keep rising.

  • ü Inflation: this plays a fairly relevant role here, since by reducing investment environments, then, when it rises, the value of the currency is reduced in the long term, since inflation significantly affects consumer prices, likewise with Currency statistics.

  • ü Demand for resources: the currency takes considerable force when there is a great demand about the products it has, an example of this is the euro zone, because there are produced certain raw materials such as coal, agricultural products, certain metals, among others .

  • ü Economic cycle: some indicators tend to exclude certain criteria such as retail sales, housing figures, employment levels, etc., this makes the dollar influence.

Sentimental Forex analysis.

 This analysis is irrelevant but it is a fundamental part when it comes to knowing how Forex works, because each trader has their own expressions and thoughts, because, this contributes to the general feeling of the market, this makes them over-react and make the real value, because , it is here where the prices of the levels tend to rise, because in these cases these reactions are due to the operator of the moment, because it is driven by present and future decisions, of the behavior on the part of the currencies.

 What are trading systems?

 Trading systems are a series of extremely well structured mathematical rules, so knowing how important Forexes works, since they have computer systems that are intended to be automatic in the operation of buying and selling in existing markets, as it is there where investors lay the foundations of your investment with Forex.

 With this we can conclude the guide on how Forex works where we describe the scope that Forex has and the characteristics that are present in the world market as well as the economic indicators.

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