There are two different ways how a trader can analyze the market:

1.)    Fundamental Analysis: where Economic, Political and Social aspects are being assumed as the prime force that drives the forex markets.

2.)    Technical Analysis: where charts and graphs are being studies to find out patterns that can help in forecasting the future.

It’s a controversial issue to find out which one of the two forms of Forex Market Analysis is better. If you are surfing the web then you may come across forums or websites where you can find people having their own reasons to support either Fundamental or Technical Analysis. So the traders who base their decisions on trends forming in charts would be of the opinion that identifying the trends is the only way one can make money in forex trading. On the contrary supporters of fundamental analysis would be of the opinion that markets are always fundamentals and news driven so one needs to keep an eye on economic forces.

But rationally speaking any trader cannot rely only on one type of Forex Market Analysis because even if economic change may drive currency market in a particular direction, it still would be likely to find a trend. In the same manner it’s also not advisable to only rely on technical analysis; if a trader ignores the news in the market then his deals may drag him/her into losses.

Finally there surely is an economic change that may be responsible for huge price fluctuations in the currency markets where as there are also some common trends that can be discovered which holds true usually in short run. So the best strategy for any new or experienced trader is to look out for these trends and at the same time keep your eyes open on the changing economical, political and social conditions that may have a direct effect on the price of the currency. Performance of forex market is like elastic which may stretch in one direction or the other. Fundamentals may force them to move in a particular direction and technical aspects may help in forecasting the extent to which the price may fall or rise.

Therefore the best Forex Market Analysis strategy is not to follow only one type of analysis but to perfectly balance them both while carrying out Forex trades.

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