Understanding what influences to the prices of the forex

This article will explain some of the differences between technical and fundamental analysis, and will shed light on different forms to invest. We will lean in parts of best-seller `Market Wizards', a book in which Schwager Jack interviews to Ed Seiko and Bruce Kovner.

Ed is an investor of tendencies (it uses technical analysis) and also trusts its “hunches” after 20 years of experience. Without doubt, it emphasizes his confidence in the technical analysis. Over everything, it affirms that the fundamental analysis and their impacts in the market not always work as it would be to be expected. The news that affects the market often “is discounted” beforehand by the investors and only if it is able to anticipate intuiting that event will happen before the thickness of the investors, will be able to be taken advantage of that colitis of the market.

Ed affirms that their priorities at the time of investing are the long term tendency, the present graphs and choosing a good moment to buy or to sell, in that order.

It brushes thinks that the technical analysis is very good and useful, but of no way the eye to the fundamental data has to lose itself. In addition, in the last years selvage is had observing a tendency of drastic movements very short term, coverall of quick sales as soon as an evil is known macroeconomic data in the zone Euro or the American markets. This does that to be informed to the minute into definers of the economy it is fundamental.

It is important to review that the technical analysis is a critical method to understand history of movements of the market and, for this reason, useful to identify tendencies. It does not indicate to us directly towards where the currency goes but analyzing historical data and using our intelligence, we will be able to try to anticipate as they will have to be our future investments.

The technical analysis can be compared to take the temperature him to a patient. It will say to us if a market active or cold and is slept. In addition, it will mark unusual behaviours to us. It brushes thinks that any thing that a new landlord in the graphs creates is unusual. For him, to study the graphs is crucial to be able to detect if situations unbalanced in the crossings of currencies exist at the moment, and if these imbalances have or no possibilities of accentuating themselves or of returning to a starting point.

The fundamental data are those that will help us to decide if the value of an investment will be increased or decreased. Everything what makes “bark” to a country, in terms of Forex. Cost of the consumers, cost of the government, governmental index of use, policies at outer and inner level, industrial preoccupations of the government, indices, exports and imports, power consumption and even significant individual events, all this can influence from great way to the Forex market.

In summary, the fundamental data indicate the direction of a price but not those exact prices. The technical analyses of the graphs are better for that, which causes that both types of analysis are complemented perfectly for better the possibilities of realising good investments and “to scratch” more pips.

The reason that so much is emphasized very many the technical analysis is because there is traders that uses graphs at any moment, and will be all drawing the same lines of defence and the same lines of support. So, if you are able to include and to interpret the graphs correctly, you will have a magnificent opportunity to predict the movements of the market. The best form to learn about the effects of the fundamental ones is to learn simultaneously about an economic data. This will help him to realise its investments more and more reducing its uncertainty.