They are either from the school of Technical analysis, fundamental analysis or they make apply of both disciplines. While forex trading can be carried out successfully with the utilization of just one type of analysis, those that have a basic comprehend of both technical in addition to fundamental analysis tend to be better equipped.

The foundation of technical analysis is based on volume, price along with past market data to establish currency along with future pirce movements. Strict technical traders put their faith purely on these factors with no consideration to external factors.

Yet, the way the charts are viewed and the forex indicators employed for such an analysis are very extensive. Technical analysis also includes support along with resistance, daily pivots, trend lines in addition to pattern formations.

External factors such as economic data plus political news are not factored in. Trend lines in addition to the methods employed to spot them play a huge part in technical analysis. A lot of effort as well as forex indicators in addition to tools are used to verify the continuation or reversal of the current trend.

Because technical traders respond to any change in the trendline, they generally open more trades than long term fundamental traders do. They are usually composed of mid term along with short term traders. Having said that, scalpers can make use of both disciplines plus end up opening huge amounts of trades every week. Scalping is a topic for another day however.

Technical analysis is employed by the vast majority of traders in any financial market today. The reasons for this are straightforward. This is the case simply because technical analysis is easier to comprehend in addition to employ that fundamental analysis. The trader does not need a good understanding of economics.

Should you require a thorough tutorial on Fundamental Analysis as well as a wide variety of popular Technical Analysis can be found on the authors forex trading website.

You only have to think back to recent stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical analysis charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocksis so popular.

So what is the secret to technical analysis?, Im about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings dont mess with them.

The real secret to technical analysis is to become VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

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John Murphy has written 8 highly touted technical analysis books and today you’ll be sitting in on one of his seminars for no expense. His expertise is known the world over, his teaching style is impeccable, and he’s agreed to give access to a limited number of people for one of his most sought after seminars!

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