Forex Technical Analysis for The Novice Investor:

Technical analysis tries to forecast future price movements by analyzing past market data.
One of the basic principles of technical analysis is that historical price data predicts future price action.
Whereas the forex is a 24-hour market, there tends to be a significant amount of data that can be used to determine possible future price activity. This makes it an ideal market for traders that use technical tools, such as trends, charts and indicators.

There are three basic steps forming the basis of technical analysis:

1. Market action discounts everything! This means that the price is a reflection of all components that is known to affect the market. Some of the factors are: fundamentals, supply and demand, political pressure factors and market sentiment. Pure technical analysis is only concerned with up and down price movements, not with the reasons for those changes.

2. Prices move in trends. Technical analysis is used to calculate patterns of market behavior. That market behavior has been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. You should also be aware that there are patterns that repeat on a predictable basis.

3. History repeats itself. Forex Trading chart patterns have been recognized and categorized for over 100 years, and this leads to the conclusion that human psychology changes little over time. Since patterns have worked well in the past, it is assumed that they will not change in the future.

Technical analysis goal is to forecast price trends in future based on historical data along with the volume. Any private investor can access the technical analysis tools in order to compute his or her trading decisions. Technical analysis has been in use for centuries, that's why its premises are based on the experience, prolonged observation and can be considered quite reliable.

is Broker-Bashing one Gigantic Witch Hunt?:

Choose your forex broker accordingly: If you use forex broker competition with a dealing desk then you are more likely (in theory) to experience slippage than if you use an ECN style broker. It is likely that a human will actually be matching and filling orders on a dealing desk which leaves you open to an added delay, especially at busy times. forex broker competition doesn't have this limitation and that fraction of a second saved can make a huge difference. In conclusion, if you are actively trading at busy times then forex broker is probably most suited to your needs. On the other hand if you trade infrequently or you have a small account and cannot afford the commission fees that forex brokers charge then a broker with a dealing desk may be adequate.

My forex Broker is Trading Against Me

This is an extremely common complaint that has lead to the conspiracy theory that most forex brokers competition actually want you to lose your money because they are on the other side of your trades. Let us step away from this theory for the moment and consider the fact that there is ALWAYS someone on the other side of your trades. For you to go short someone else must go long and vice versa so someone somewhere always wants you to lose! Now, some forex brokers competition claim that they match client orders at the dealing desk while others use their dealing desk to offset their clients' trades with their own overall position in the market, which is known as hedging. If forex broker competitive is perfectly hedged then they simply collect the spread that you pay them (which is greater than the spread they pay in the interbank market) and that is their profit. The conspiracy theory has come from the notion that most traders lose and so it would be more beneficial for forex brokers to trade in the opposite direction to their clients rather than go in the same direction and hedge themselves. Experiences of delayed orders, slippage and stop hunting have added fuel to this fire because they can be easily explained as forex brokers competitive stealing your money rather than potentially legitimate problems incurred at busy trading times.

Conclusion

In this article we have attempted to point out to you alternatives to forex broker malpractice theories and a few ways in which you can minimise their effects. If you are a firm believer that your forex broker competition is trading against you and wants you to lose then you are developing a potentially self-destructive frame of mind. This belief may prevent you from identifying problems closer to home such as trading psychology and strategy inadequacies. But the fact remains that if you are unhappy with your forex broker or you are experiencing excessive slippage, multiple re-quotes, poor customer service, possible stop hunting, platform freezing and held orders then you should change forex brokers competitive. At the end of the day the reasons for poor service are of secondary importance behind the effect it has on your trading. It may be that your forex broker is honest but technologically inept or it may be that you are the victim of a bucket shop but try to keep your complaints within the context of market dynamics. If none of the coping strategies listed above make any positive difference then it is definitely time to find a new broker.

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