My decision to become a technical trader in forex trading was not made lightly. With time and experience, I have discovered several reasons that incline me towards technical analysis rather than fundamental analysis.
Here are the main reasons behind my choice:
- Tangible Results
One aspect that draws me to technical analysis is its concrete results in the form of numbers. All market movement information is reflected in currency prices, which can be directly interpreted and analyzed.
- Clear Trend Clarification
Technical analysis provides a clearer picture of price movement trends. Its ability to identify trends more decisively is crucial for me as a trader, as it helps me make more accurate decisions regarding trading positions.
- Repeating Chart Patterns
One intriguing aspect of technical analysis is its ability to identify repeating chart patterns. History tends to repeat itself, and certain patterns on charts can provide valuable insights into future price movements.
Furthermore, my negative experience when attempting to rely on fundamental analysis has also influenced my decision. After several unsatisfactory attempts, I realized that the technical approach aligns better with my trading style and preferences.
In applying technical analysis, I rely on several key indicators that have proven effective for me:
- Moving Average (MA)
I choose Moving Average for its simplicity and ease of understanding. MA provides an overview of trend direction by smoothing price data over a certain period. By using multiple MAs with different periods, I can obtain more comprehensive information about market trends.
- MACD and RSI
I use MACD to help forecast momentum in trends, while RSI assists me in identifying oversold or overbought market conditions. Both indicators provide additional valuable insights in making trading decisions.
- Fibonacci Retracement
Fibonacci Retracement is one of my favorite indicators due to its ability to identify significant support and resistance levels. By using Fibonacci Retracement, I can determine potential levels to enter or exit the market.
- Candlestick
Finally, I rely on candlestick patterns to gather information about market activity and buyer and seller behavior. Through candlestick patterns and trading volume, I can identify potential trend changes and optimal entry points.
With knowledge of these indicators and a good understanding of market patterns, I feel comfortable being a technical trader. For me, technical analysis provides a strong and effective framework for making trading decisions based on clear data and facts.
How about you? Do you also feel more suited to technical analysis or fundamental analysis?
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