To become a successful trader, it is essential to analyze the market before opening any position. Analysis of the market includes predicting the price trend and search of the best software for trading. Analysis on Forex Trading is of two types – Fundamental Analysis and Technical Analysis. The aim of both the analysis is same but the method of conducting both the analysis is different. The focus of fundamental analysis is on government policy, money policy and economic indicators whereas technical analysis focuses on the market behavior and price action on charts.

Fundamental Analysis
If you are a beginner in the Forex market and the frequency of your trading is low then you should prefer fundamental analysis. Don’t ignore fundamental analysis even after you become experienced in the Forex Trading. Fundamental analysis is not easy and so it should be done carefully with all the data and latest market news. Fundamental analysis is based on many factors such as social, political and economic influences, financial support of any country. There are many models used in forecasting. Different experts prefer different models and so get different results. Some may earn profit and the others may go in loss. Exact market prices cannot be found from fundamental analysis but still it is the best way to predict economic conditions. Experts of fundamental analysis can correctly predict the economical position of the country and the forces responsible for it.
If you are doing fundamental analysis then don’t confuse yourself with too much information. Follow the simple calculation because the more simple the calculation, the more simple and useful will be the result. Don’t base your results on the information derived previously because information derived previously may or may not work at present. Do the fundamental analysis from present information only. Take care of the events that are expected to happen because expected events also sometimes decide the trend of the market. Start trading after you have the results of fundamental analysis.

Technical Analysis
Technical analysis depends on the numbers. Technical analysis is only concerned with what is the price and not why is the price. Technical analysis does not count reasons of rising or falling trend. Technical analyst does not find the reasons of rising or falling prices but only count the steps between the initial price and the final price of a certain trading period. A technical analyst is more concerned with the price history and the potential trading opportunities.
The two important technical indicators are Relative Strength Index (RSI) and Moving Averages. RSI gives the correct prediction of the relative strength of the market at present. Two most important periods in setting RSI indicator on chart are 14 and 21. Moving Average is of two types, one that is on top of the price data and the other that is not related to the price data. The concept that applies in both the moving averages is if short term action is different from the long term then it is a profitable trading opportunity. See a figure below of simple moving average showing technical analysis.

Comparison of Fundamental and Technical Analysis
GDP, imports, exports etc are the economic indicators that are used in fundamental analysis whereas technical analysis is done on the basis of technical indicators. Some traders and investors agree that technical analysis is better than fundamental analysis because fundamental analysis can only predict the direction of the market movement whereas technical analysis can predict both the direction of the market movement and rough currency rate. This does not conclude that technical analysis is better than fundamental analysis because both have proved useful to the traders and both have given losses to the traders in the falling market. Traders can be successful with fundamental analysis if technical analysis doesn’t work.

So taking all the indicators into consideration the analyst can predict the market movement and rough prices on charts.

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