Table of Contents
Affiliate Disclosure
Affiliate Disclosure adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

The Scope and Advantages of Technical Analysis

Some of the crucial questions being asked by Forex traders include "Is the market over priced?" "Which levels are the good entry points?"

Trading would become much easier, if one would know the answers to such questions. Though an accurate forecast of future prices is a difficult task, technical analysis makes it simpler to handle.

Technical analysis includes the study of chart patterns, candlesticks, moving averages, and other indicators. It is easy to apply in any market, in which the the raw data (prices and volume) is available. With the help of technical analysis, it is easy to understand the sentiments (psychology) of the market and to forecast the prices, without looking at the fundamental factors of a particular currency.

Scope and Advantages

Technical analysis is widely used by forex, equity, and commodity traders, to determine the short term as well as the long term trends of the market. The scope of technical analysis is increasing every day, as more and more people are trying to learn the skills of technical analysis to earn good returns.

Main Advantages of Technical Analysis

  1. Trend Analysis:

    The biggest advantage of technical analysis is that is helps investors and traders predict the trend of the market. Up trend, downtrend, and sideways moves of the market are easy to predict, with the help of chart analysis.
  2. Entry/Exit Point

    – Timing plays an important role in trading and investing. With the help of technical analysis, traders and investors can predict the right time to enter and exit a trade thereby enabling good returns. Chart patterns, candlesticks, moving averages, Elliot wave analysis, and other indicators are very useful for traders to make entry and exit points.
  3. Provides Early Signal

    Technical analysis gives early signals and also paints a picture about the psychology of investors and traders regarding what they are doing. Price-volume analysis also indicates the movement of market makers and their activities related to a particular market. Another main advantage of technical analysis is that it gives an early signal when it comes to trend reversal.
  4. Quick and Less Expensive

    – In currency trading, technical analysis is less expensive as compared to the fundamental analysis and there are so many companies that provide free charting software. Technical analysis gives a quick result for traders who use 1 minute, 5 minutes, 30 minutes, and 1 hour charts. For instance, the formation of a head and shoulder on 1 minute and 5 minutes chart gives fast results, as compared to the daily chart.
  5. Provides Lots of Information

    – Technical analysis is helpful for short term trading,Swing Trading, and long term investing. Technical charts provide a lot of information that helps the traders and investors build their positions and take trades. Information like support, resistance, chart pattern, momentum of the market, volatility, and trader’s psychology are just some examples of types of information provided by technical analysis and used by traders in the Forex market.

Key Takeaways

In technical analysis, there is an ample amount of opportunity for those who know how to read charts and how to take actions (buy/sell) by looking at the charts. Trend analysis, right time to enter and exit, and early trade signals are the biggest advantages of technical analysis, which should motivate all Forex players to learn about it and begin using this effective tool. Team
About Team
The team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.

Most Visited Forex Broker Reviews