What is Technical Analysis?
Technical analysis is the term which you would hear very often while trading currencies and obviously as a forex trader you should be familiar with the term technical analysis. This method is a study of price movements of various currencies. In a forex technical analysis, the analyst will use many tools, techniques and strategies for prediction of future movements of currencies. A analyst could be anyone, a forex trader, a broker or any investor. So the basic purpose of technical analysis in forex trading is just to predict future currency prices using past data or other tools.
There is not a single way or technique for technical analysis rather there is a whole list of different tools and techniques which can be used to analyse currencies from a technical perspective. Since the basic purpose of analysis, from a forex trader point of view, is to predict or forecast the future currency prices and then to invest in most profitable ones, so the best tools are ones which predict the most accurate price movements.
As with the passage of time, forex trading is getting simpler and easier with the involvement of forex trading platforms and advance trading systems like Meta traders and others. Now the brokers or trading software are fully equipped with trading tools, forex strategies and analysis tools. Traders do not need to make predictions on their own rather their trading software will automatically do it for them.
Online trading software are pre-installed with many forex indicators, charts, market analysis tools, forex strategies, expert advisors and many other useful and helpful tools. All these tools in some way ease the traders in making their investments. Forex indicators are considered as the best market analysts which predict or forecast the future market trends. There are thousands of forex indicators available readily on internet for downloading. As a trader, you can add as many indicators and charts in your trading software as you need. Furthermore, you can also hire some programmer to have your own indicator designed for you according to your own needs and requirements. If you are just beginning if forex trading, it is suggested and highly recommended that you should initially use only one forex indicator or chart as a market analysis tool and get familiar with it, and then move on to others. Switching between various Forex Technical Analysis tools will create many troubles for you and you may end with heavy loss.