Technical analysis

Set of tools not magic wands

Many traders see indicators and systems built solely from them as the only way to foresee near or not so near future on forex and also on other markets. Trying to interpret various indicators correlations the main sense of technical analyze gets lost somewhere and many beginner traders start to trade indicators not market price. Indicators as well as systems based on them are *tools*, one should never forget about that. There is no way that any tool without knowledge how to use it and experience of using it will bring anything more than injuries. Lets take an experienced carpenter with his set of tools - he is making state of art furniture from raw materials daily but if you take an apprentice he will only waste resources and even harm himself with just the same set of tools.

No free lunches

For success you need to pay with your time, energy and/or money

There is no magic in indicators. It is statistical research not a magic wand. It takes time to learn how to use them properly, it takes experience to use them profitably. Technical analysis is easier than fundamental, both of them are not rocket science but still you need to invest your time, money and energy to learn how to analyze markets in order to make profitable decisions.

Holy grails

and other automated money generators

Millions of traders and analysts are in pursuit of a golden method that will make them instantly rich beyond any recognition. Unfortunately after years that we spent in the market we didn't found any trace of the holy grail of financial markets. What we found are tools only. Some of them are better some worse but no mechanical money generators were found. This makes us to draw conclusion that matter if we earn or lose when trading markets depends solely on ability to asses current market situation and take advantage of it. As every ability can be learned and trained to sufficient level, ability to see what market is doing and what will do next is not an exception here. It will take time and lots of sweat but frankly it's the most profitable ability that can be learned on our little planet.

Technical Analysis on forex market

Forex market is, as we all know by now, by far the most liquid market on earth. Currencies tend to move in strong trends which basically makes trend following indicators work better on them. Currency exchange rate is influenced by numerous factors such as international trading deals, government actions, FOMC meetings, interest rates. Even rumors can have some influence on currencies. Exchange rate shows average of all factors interpreted by traders. Indicators that show anomalies in current market situation sometimes shows the very start of major trend changes. To take advantage of such indications again knowledge and practical experience is needed, but above all ability to see big picture. Only when seeing complete market situation, various indications are worthwhile.