The Importance of Forex Historical Data
By definition, a Forex trading market is a 24/7 cash market wherein the currencies of nations are being bought and sold through brokers. The Forex prices would change from time to time in accordance to real-time events like political issues or perhaps the rate of inflation. The so-called “Forex analysis” is being used by market players since this would allow them to predict currency price movements. It is divided into two categories: technical and fundamental.
A fundamental analysis would use economic and political factors in order for it to predict currency movements. Meanwhile, a technical analysis would use reliable forex historical data in order to forecast the currency movements.
The fundamental analysis uses economic and political factors like the unemployment rate, housing starts, inflation in order to come up with a prediction for currency movements. It is also concerned with the reasons behind the currency movements.
A technical analysis uses forex historical data as its way of predicting currency movements. Technical analysis does not believe with the reasons for currency movements instead it believes that historical currency movements are obvious indications of future ones. A technical analyst has strong a strong stand in believing that history repeats itself and the common tool is the chart as it tracks and predicts currency price movements.
For instance, during back-to-school time, a technical analyst might be able to observe that people are most likely to go shop for clothes than flowers. Also, a technical analyst could determine that more men are going in to flower shops during Valentine’s Day than into clothing stores. Another example would be the increase of oil price. This means only one thing: inflation. The interest rates would rise as a way of controlling inflation. One historical result of higher interest rates is using less money to spend which shows slow economic growth. Another historical result is the increase in foreign investment in the currency which is affected by the higher interest rates which strengthens it.
Forex traders’ decisions vary. Others would rely on fundamental analysis while others would go for technical analysis. But most successful traders use both strategies and it works on them. But, one should always bear in mind that there is no such thing as having a strategy that is 100% certain.
If you want to get other information about forex and the importance of forex historical data then you could always make your own research online and be enlightened with the information that you will get.
About the Author
Markets4you – Forex WebTV – 01/09/2011 in Bahasa Malaysia