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What is the best way to analyze the market?
Let's agree on one fact, that there is no better analysis than the other.
Do not miss looking at any aspect of the market while performing any type of analysis, for example, the fundamental analysis: it will give you an idea about the economic data, political events and natural disasters.
As for psychological analysis, it will give you information about the mood or moral of the current market situation, while technical analysis will guide you to anticipate future movements of prices based on previous charts, trends, indicators and other tools.
Technical analysis will also help you find the right entry and exit points. When trading in the Forex market you will need to analyze the market, and the market analysis is a mix of ( fundamental + psychological + technical)
If you neglect one of the three types, your positions can collapse, so suppose that the three types of analyzes showed that the Australian dollar is taking a great trend, and then you decide to buy the Australian dollar against the US dollar, then economic data flowed from China stating that some signs of economic weakness have appeared and this will lead to the collapse of the currency pair, which will cause you lose money and this will create a gap in your portfolio.
You are now wondering what the Chinese economy has to do with the Australian dollar’s value, right? You will know the answer to this question when we discuss the different types of currencies in our upcoming articles. The previous example shows what happens when the fundamental and psychological analysis agree with each other and differ with the technical analysis. The Australian dollar was subjected to shock when there was news that there was a weakness in global economic activity and this is likely due to the fundamental analysis, because China has the largest import share in Australia At 29.5% of total Australian supplies.
The best way to trade is by using the three analyzes, because relying on one analysis that may expose you to a loss may be due to an unexpected reason that you did not take into account while analyzing the market. If you prefer to use one of the three analyzes, this is OK if its results are good and lead you to profit, but do not neglect the rest of the analyzes.
