Trading Analysis - Gateway of Trading
There are 2 basic types of analysis you can take when approaching the DFT Futures trading:
1. Fundamental analysis
2. Technical analysis.
There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know a little bit of both. So let’s break each one down and then come back and put them together.
Fundamental analysis is a way of looking at the market through economic, social and political forces that affect supply and demand. (In other words, you look at whose economy is doing well, and whose economy falling. The idea behind this type of analysis is that if a country’s economy is doing well, their currency will also be doing well. This is because the better a country’s economy, the more trust other countries have in that currency.
For example, the OIL market has been gaining strength because the Manufacutring factories are gaining strength. As the economy gets better, consumption of oil get higher to better demand and as a result, the value oil price tends to increase. In a nutshell, that is basically what fundamental analysis is.
Technical analysis is the study of price movement. In one word, technical analysis = charts. The idea is that a person can look at historical price movements, and, based on the price action, can determine at some level where the price will go. By looking at charts, you can identify trends and patterns which can help you find good trading opportunities.
The most important thing you will ever learn in technical analysis is the trend! Many, many, many, many, many, many people have a saying that goes, “The trend is your friend”. The reason for this is that you are much more likely to make money when you can find a trend and trade in the same direction. Technical analysis can help you identify these trends in its earliest stages and therefore provide you with very profitable trading opportunities.
Now I know you’re thinking to yourself, They use crazy words like "technical" and "fundamental" analysis. I can never learn this stuff!”
So which type of analysis is better?
Throughout your journey as an aspiring DFT Futures Trader you will find strong advocates for both fundamental and technical trading. You will have those who argue that it is the fundamentals alone that drive the market and that any patterns found on a chart are simply coincidence. On the other hand, there will be those who argue that it is the technical’s that trader’s pay attention to and because traders pay attention to it, common market patterns can be found to help predict future price movements.
In order to become a true trader you will need to know how to effectively use both types of analysis.
NEVER EVER TAKE unshakeable POSITION THAT YOU ARE RIGHT AND MARKET IS WRONG