http://www.henryliuforex.com If you are a Forex trader or aspiring to be one, then having the skill of analyzing the Forex market may be your greatest arsenal. Forex analysis is such an important skill that, if you are a Forex trader, you ignore it to your own detriment.

1. Forex Trading Analysis
If you are a Forex trader or aspiring to be
one, then having the skill of analyzing the Forex
market may be your greatest arsenal. Forex
analysis is such an important skill that, if you
are a Forex trader, you ignore it to your own
detriment.
It must however be mentioned that analyzing
the Forex market is not always an easy task
though it can be done by any individual who
really wants to learn. Forex trading analysis is
therefore not the preserve of Forex brokers.
Analyzing Forex markets involves a lot of critical
and analytical thinking. When it comes to the
basics, there are two ways in which a Forex
market can be analyzed. The first is called
technical analysis and the second is
fundamental analysis.
We will explore both approaches in this article.
Forex Trading Analysis ( Courtesy of HenryLiuForex.com )

2. Forex Trading Analysis
Technical Analysis
This looks at the action or performance of the
market in the past and based on that, predictions
are made. You may wonder why this approach (in
a technical field like Forex trading). The fact is
that, history always has something to tell us. In
fact, you can look at past trends in a particular
season and compare it to a current trend. The
fact is that, people really do not change and what
motivate people to buy and react to the market
in the past may not be different from today.
I must admit that this process can be very
daunting since you need to analyze the day-by-
day figures of the past and compare it to day-by-
day figures of the present upon which you can
then make your predictions. For smart
analysts, they have learned and mastered the art
of looking at the big picture, skipping the minor
details and analyzing trends over a certain length
of time. Of course, if you are a beginner it is not
advisable to go by this method. It is when you
have mastered the skill of analyzing day by day
that you gain the insight and experience to do it
this way.
Forex Trading Analysis ( Courtesy of HenryLiuForex.com )

3. Forex Trading Analysis
Fundamental Analysis
The second approach employs the use of
current external market forces such as
political, governmental, and social factors.
This is usually more in-depth and requires a
high level of accuracy as you need to be able
to examine how these factors impact on the
numbers in a Forex market.
Good external factors like favorable financial
reforms, confidence in the
economy, favorable political sentiment, and
the rest affect positively on the Forex
market and therefore analysts are able to
predict how the market would fair. On the
other hand, bad external market factors like
political instability, unfavorable foreign
exchange rates, unemployment
numbers, and even natural disasters can
affect negatively, the performance of the
Forex market. Fundamental analysts always
have a way of using these factors to analyze
Forex trading in order to make predictions.
Forex Trading Analysis ( Courtesy of HenryLiuForex.com )

4. Forex Trading Analysis
You may ask which of the approaches do you use when analyzing a Forex market? The fact
is, most good Forex traders employ a combination of the two for their Forex analysis. Let me
give you a typical example. If a country is currently facing a major disaster like earthquake
(fundamental analysis) and from past Forex numbers he knows that during a similar season in
the past there was a dip in the Forex market (technical analysis), he can then predict with a
certain degree of confidence that, barring any other unforeseen circumstance, there will be a
down-turn in the market.
Forex Trading Analysis ( Courtesy of HenryLiuForex.com )