In fact, forex trading is like making predictions. Money does not change randomly. Instead, changes are made in a predefined way defined by market demand. Therefore, as long as the learning and experience are correct, the transaction is not impossible.
There are two main ways to forecast currency for foreign exchange transactions. The first is technical indicators, followed by market analysis based on economic and news trends. Both must be done in parallel.
Beginners can only make predictions based on technical analysis, while advanced traders must make predictions based on news related to economic trends.
Technical analysis is a sensible way to predict currency movements based on mathematical formulas. Users may not need to know the mathematical details associated with such analysis. They only need to know how to use these indicators correctly.
For example, for stochastic indicators, this method of predicting currency changes means looking at whether the number of indicators is very low or very high over a relatively long period of time. In this case, a trading event will occur and the trader can buy and sell the currency being traded.
On the other hand, economic analysis is used to predict currency changes based on the financial situation of the country in which the currency is traded. It depends on the state of the country's industry and the state of the country's politics. For example, if the country is in a war, it will affect the country’s monetary value.
As mentioned above, this type of analysis requires advanced traders to use. Technical indicators are simple, if not all, because some indicators may be difficult to use.
The foreign exchange trading strategy is a method based on a combination of technical indicators and news analysis to predict currency changes. For example, a foreign exchange strategy may have two technical indicators, such as a stochastic indicator and a MACD, and no news analysis is included in the strategy.
In order to get a more successful strategy, traders must use fewer metrics for simplification. Generally, the simpler it means the greater the success. This applies not only to forex trading, but also to many areas of our lives.
Predicting currency changes in a simpler way will give you a rough idea to help you decide whether to buy now or sell now. The ability to accurately predict exchange rate changes is the key to successful trading. In other words, the inability to predict the movement of the currency will result in a failure to trade and cause losses.