Article courtesy of The Forex Signals
Foreign exchange trends and foreign exchange prophecies aren’t the same thing. A system that is based upon trends involves having a look at charts to see what the price movement has been over the past few periods. In this manner it is often feasible to identify a long term trend of upward or downward movement in the cost of the currency pair. We can benefit from that by backing the trend and watching our profits rise – provided of course that we get out before the inescapable reversal. It is always important to remember that no trend continues for ever and ever. Foreign exchange prophecies involve making a judgment about which way the market will go in the future. So they are not so dependent upon charts and analysis of the recent past changes in price. Often , they’ll be based on fundamental research, which is analysis of the commercial factors that drive the market, such as an impending interest rate change. The issue with trying to prophesy the foreign exchange market is that many of us do not have any special information on which to base our prophecies. Often times it can come down to a gut feeling which is not much more than prediction or gambling. If we rely on info from fiscal websites, blogs or papers then we are putting our trading into the hands of reporters. Whether or not the information is correct, we may forget that the remainder of the world has got accessibility to the same information and so the market may already have replied. Trends on the other hand allow us to set up our own systems and avoid trading around instances when announcements are due.