How to Use Technical Analysis in Forex Trading in Singapore

The use of technical analysis is central in forex trading, to the traders in Singapore rely on price charts and other types of indicators while fundamental analysis employs more quantitative and qualitative data on the economy and finance, technical analysis does this by paying much attention to price charts to make its market forecasts. For the forex trader, knowledge of how to apply technical analysis gives the trader a competitive advantage when trading in the volatile market.

The first stage of using technical analysis is therefore to explain the major devices and ideas that traders employ when analyzing prices. The chart is the most basic building block of technical analysis, and you might ask, what is it? Candlestick charts have probably received high popularity for one simple reason – due to them, a lot of helpful information concerning the price movement within a certain period of time can be gained. Every column portrays a particular period and the opening price, closing price, highest price during the period and the lowest price, which makes it convenient to analyze trends and formations. Thus, through analyzing such a relationship between candlesticks, a trader sees levels at which the bullish or bearish pressure is most likely to be reversed.

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Two more important components of technical analysis are key indicators and oscillators. The Moving Average (MA) is the most common concept, which removes noise from the price data in order to find out trends over some period of time. From these indicators, moving averages that are vital from the forex trading perspective include the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). In Singapore, a forex broker usually provides several options of moving averages where the trader can implement the option in charts in order to determine the trend following signals.

It is crucial to compare the stocks under analysis employing specific indicators: the first one is the Relative Strength Index (RSI). It is used to reflect the velocity and fluctuations of price and let the trader know whether a pair is overbought or oversold. Usually, values that are above 70 can make a pair vulnerable for a downside correction, whereas the values below 30 can make it vulnerable to an upside bounce. Thus, RSI when combined with other indicators can be used to enhance the accuracy of a trader’s trades.

The concepts of support and resistance are inherent in the technical analysis of the stock market. These levels indicate where a currency pair is likely to change its direction, they are price levels. The first is support is the volume level that a price finds it hard to continue falling while the second is the level that a price finds difficult to continue rising due to the selling pressure known as resistance. Knowing these levels makes the trader set appropriate entry, exit and stop out points.

A forex broker in Singapore offers a trade interface coupled with a strong charting package and rich set of analysis tools. It also explains how the use of these platforms enable traders to assess currency pairs in live time and enhance their ploy execution. Most brokers also provide technical tools, and seminars for traders to learn how to apply technical analysis in trading.

Despite the effectiveness of the technical approach, it is crucial to apply it to the analysis of complex structures accompanied by reasonable risk management techniques. This is an imperfect world, and in forex markets there are a lot of signals that can be given. Hence it is advisable to set stop-loss orders and make sure that one has a proper trading perspective in order to help reduce possible exposures and to increase the chances of getting good returns.

Specializing in technical trading analysis and using the right forex broker in Singapore, one is able to come up with trade conduct methodologies that would enable him/her to meet his/her goals in the unpredictable forex market. Evaluating the trends, applying indicators, and identifying market patterns will equip you with the knowledge that will enable you to create better decisions about trading.

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Rahish

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Rahish is Tech blogger. He contributes to the Blogging, Gadgets, Social Media and Tech News section on TechOTrack.

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