The first point to keep in mind is:

Forex technical analysis is a game of odds not of certainties, so forget about predicting with scientific accuracy, no one can achieve that – but if you understand the following equation, you can make big forex profits:

Fundamentals + Investor Psychology = Price

It is a fact that the fundamentals have an influence on price – all investors have the facts at their disposal but they see them in their own way and this mass of millions of people determines forex prices.

Investor psychology

Human psychology is constant and never changes.

Traders will always be influenced by emotion and these emotions of greed and fear, will push prices to far away from fair value and these price spikes are easy to see on forex charts.

The important point to keep in mind is that investor psychology repeats – and so do chart patterns.

Seeing the Whole Picture

Another very important point to keep in mind with forex technical analysis is that it studies the fundamentals.

All it does is simply assume that in today’s world of instant communications, they show up straight way in price action.

Studying forex charts however does something more:

It studies how investors perceive the fundamentals.

Its is not enough to simply look at the facts, as we all draw our own conclusions from what we see and emotions ensure that investors don’t act logically – they push prices to far ( either up or down) based upon their emotions.

Studying forex charts gives you the whole picture – it reflects the fundamentals and more importantly, how investors perceive them.

When using forex charts you don’t care how and why prices move, you simply look at the reality of price and try and make profits from the moves.

It sounds simple as a concept and it is – but it’s extremely powerful and if you incorporate it in your forex trading system, you can make big profits by trading when the odds are on your side.

Forex Technical Analysis Is Time Efficient

Using forex technical analysis is time efficient, you are studying price and don’t need to make assumptions of where they may go based upon the news – you can see the price as it is and simply trade the truth.

Many traders continually look at news and try and trade off it – but this is hard – the fundamentals are discounted instantly and you have very little chance of winning. Furthermore, if you look at the opinion of others your emotions get involved and any trader who lets emotions dictate their forex trading strategy, is destined to lose

Trading forex charts lets you see the reality as it is – no opinions or guessing and that gives you a huge advantage when trading for profits.

Forex Charting is An Art

Of course, all people use forex charts in different ways and it’s an art not a science.

It is similar to being a ships captain – use your charts correctly and you can get from A – B safely and earn a living; use your charts in the wrong way and you will hit the rocks and drown.

There are many myths perpetrated about using forex charts and if fall victim to them and you will lose.

The good news is anyone can become a successful forex chartist and if you follow basic rules, you can trade with the odds on your side and execute your forex trading signals correctly and win.

In part 2 of this article on forex technical analysis, we will look at basics points to incorporate into your forex trading plan, to be successful and look at common myths regarding forex charts you need to avoid.

The Foreign Exchange market, usually referred as forex, is where banks, capitalists and speculators exchange one currency to another. The largest foreign exchange activity retains the spot exchange among five major currencies: US Dollar, British Pound, Japanese Yen, Eurodollar and the Swiss Franc. It is also the biggest financial market in the world. In comparison, the US stock market may trade $10 billion in one day, whereas the Forex market will trade up to $2 trillion in one single day. The Forex market is an opened 24 hours a day market where the primary market for currencies is the 24-hour Interbank market. This market follows the sun around the world, moving from the major banking centers of the United States to Australia and New Zealand to the Far East, to Europe and ultimately back to the Unites States.

There are three main causes to participate in the Forex market. One is to facilitate an actual transaction, whereby international corporations convert profits made in foreign currencies into their domestic currency. Corporate treasurers have their own forex trading strategies so they also get into the Forex market in order to hedge against undesirable exposure to future price movements in the currency market. The third and more popular reason is speculation for profit. In fact, today it is estimated that less than 5% of all trading on the Forex market is actually helping a true commercial transaction.

Forex trading system views forex market as an Over the Counter (OTC) or Interbank’ market, due to the fact that transactions are carried on between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. In this big forex trading system forex trading starts each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can react to currency fluctuations caused by economic, social and political consequences at the time they occur – day or night.

So far, professional traders from major international commercial and investment banks have ruled the Forex market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders, to private speculators. The Forex market is called an Interbank’ market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes big multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

Forex trading system is the biggest financial market in the world, with a daily average turnover of approximately US$1.2 trillion. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen. Approximately 80% of all Forex trades close seven days or less and more than 40% last fewer than two days. As a universal rule, a position is kept open until one of the following occurs: realization of enough profits from a position, the specified stop-loss is triggered, another position that has a better potential appears and you require these funds.

Fundamental analysis evaluates the economic, social, and political forces that drive the currents of supply and demand. Fundamental analysts examine various indicators, like growth rates, interest rates, inflation and unemployment, and use these to estimate future performance. The assumption of fundamental analysis is that supply and demand are the determinants of currency price movements. The conclusions from this analysis become the basis for forex profiting trades. While this may be true on a fundamental level, market psychology can play a strong influence and that is not always found in macroeconomic indicators.

Technical analysis concentrates on studying price movements, using historical data to project the direction of future prices. The premise in technical analysis is that all current market information is already factored into the prevailing price of each currency. Thus there is no need to analyse macroeconomic data anymore; studying price action is all that you need to plot your forex trading moves and make forex profiting transactions.

It may be that the best strategy for forex profiting is one that utilises both fundamental and technical analysis. You can be in a forex profiting position when price movements are gyrating for some unexplained reason. There are forex profiting opportunities in such situations, if you place your trades properly. Without doing any real research and just looking at the currency charts, you can sense when you are on the forex profiting side of a move.

If you are new at forex trading, then you certainly have the right to ask yourself what are my chances for Forex Profiting. Well, if you let yourself in the hand of an experienced trader, then those chances are high. There is a lot of winning potential for foreign exchange trading and you too can be one of those many people engaged in such types of investment. Forex Profiting is in fact a favorable blend between circumstances, including your decision to go for Forex Managed Accounts. That person handling all of your accounts will be able to explain to you all about Forex Profiting and the most popular strategies that investors currently implement. With that help and other resources offered, you will achieve Forex Profiting in no time.

The purpose of investing in Forex trading is to earn profits from foreign currency movements. Forex trading is always done in currency pairs. Two currencies that make up an exchange rate are called currency pair. Investors who trade currency pairs need very fast buy and sell Forex signals. Without these Forex trading signals, it is difficult to decide market conditions in terms of entry or exit in the market. These Forex signals and trade alerts will indicate you for going out or coming into the market. Many Forex companies, who have been involved in this kind of business, have developed forex sms signal services. Several Forex signal providers got a “free test” also that is really beneficial.

Initial investors don’t go for in details; they often rely upon one or two technical signals to decide when to buy and when to sell a currency pair. When they get a good understanding of Forex market, they start to use Forex signal software to decide when to pick up a forex entry point and forex exit point. It is not very difficult to find a automatic Forex signal indicating when to buy and when to sell a currency. An investor should compare his investment to alternative options. It is wise to buy currency you expect an increase in value relative to the currency you are selling. In an open trade, a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position

To gain high profits in a Forex trading, you should use a Multi-Target Exit Strategy. This strategy is based on providing the customers with multiple acquiring profit and stopping losses. This Forex trading strategy allows you to enter multiple Take Profit and Stop Loss levels. This Forex strategy also requires that the trader follows the trade in real time. A Forex trading strategy with a high profit percentage rewards you mentally also as it will boost you up for further trade and will make it enjoyable. A string of profits will increase your morale.

In Forex trading system, it’s not obligatory to buy some currency to sell it later. There are situations for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD). A technical analysis is also made that presumes all the information about the market and further fluctuations in prices. They too consider factors, economic, political or psychological. For more information on forex trading logon to-: http://www.connection2forex.com