Log in or register to download unlimited Forex robots!
Lesson 19: Technical Analysis in Forex Trading
What is Technical Analysis?
Technical analysis is the art of predicting future price movements based on past market data, mainly price and volume. It's all about identifying trends and patterns to forecast where the market could head next.
The Birth of Technical Analysis
Did you know technical analysis has been around for more than a century? It began with Charles Dow, the founder of Dow Jones, in the early 20th century. Interestingly, forex was one of the first markets where technical analysis gained traction, especially with the advent of personal computers in the late 1970s.
The Philosophy Behind Technical Analysis
Patterns Over Predictions: Technical analysts focus on identifying price patterns, not making pinpoint forecasts. They believe that prices move in repetitive patterns, influenced by trader behavior.
Price Reflects All: Technical analysts argue that all known information about an asset is reflected in its price. Therefore, they focus more on 'what' the price is doing rather than 'why.'
Combining Approaches: While technical analysis is powerful, combining it with fundamental analysis can refine predictions even further.
Understanding Technical Analysis
- Technical analysis involves studying past market data to forecast future price movements. This analysis can be applied to any security with historical trading data, including forex.
- The most common method of technical analysis is through the use of charts. Charts provide a visual representation of price movements over time.
Types of Charts
Line Charts: These are the simplest, showing price movements as a single continuous line.
Bar Charts: They provide more detail, showing the opening, closing, high, and low prices.
Candlestick Charts: These are the most popular in forex trading, offering detailed information about price movements.
Trend Analysis
Uptrends: When the market is making higher highs and higher lows.
Downtrends: Characterized by lower highs and lower lows.
Support and Resistance
Support: A level where the price tends to find support as it falls.
Resistance: A level where the price tends to face resistance as it rises.
Technical Indicators
Moving Averages: Helps smooth out price action and identify the trend direction.
Relative Strength Index (RSI): Measures the magnitude of recent price changes to evaluate overbought or oversold conditions.
MACD: Moving Average Convergence Divergence, used to spot changes in the strength, direction, momentum, and duration of a trend.
By combining chart analysis with technical indicators, you can develop a more comprehensive trading strategy. Remember, no method guarantees success, but technical analysis provides valuable tools to make informed decisions.
Depending on your trading style, technical analysis can be applied differently:
Trend Followers: Focus on long-term patterns, accepting pullbacks as part of the process.
Breakout Traders: Watch for breakout points but stay wary of false breakouts.
Momentum Traders: Look for strong directional movements but be mindful of sideway trends that can mislead.
Remember, every technique has its merits. It's about finding what works best for you and applying it consistently.
Profit posts by forum members!
Why don't many people post their daily winning results?
MT4talk PRO members can Turn off MT4talk daily winning result post requirements for $49.99 / month. More info...
Latest profit posts from the Trade Executor EA users.
By using the MT4talk website, you automatically agree to the Forum Rules & Terms of Use, as well as the terms below.
Everything you see on the MT4talk website is created by its users, mainly the members of the MT4talk forum.
What is MT4talk?
MT4talk is an online Forex forum with over 5000 Forex robots and over 3000 Forex indicators uploaded by forum members in the last 10 years, available to download from forum posts. The Uploaded file does not come with support.
The website doesn't sell Forex robots and doesn't provide support for the ones you download. MT4talk offers a PRO membership, allowing you to download unlimited files from forum posts. Even though the site usually doesn't provide support for downloaded Forex robots, if you're new to Forex and need help, you can buy the MT4talk dedicated support membership from the MT4talk forum. The MT4talk Dedicated support subscription is only available for purchase for MT4talk PRO members.
The MT4talk Team also provides an Artificial Intelligence Forex robot called "MT4talk Forex AI Signal - Trade Executor EA" to PRO members. However, this Forex robot is only a bonus and is not included in the original PRO membership.
Updates for the Forex robots may be limited or nonexistent, depending on the creator. If you choose to download any Forex robot or setting file from the forum, you acknowledge that you are using it at your own risk. MT4talk PRO membership is a digital product. Therefore, after you complete the PRO membership purchase, there is no refund available!
We are conducting real-life tests on Forex robots to assess their performance. For certain robots, we may use a demo account to conduct tests, and for other Forex robots, we may use a real Forex account. It's essential to recognize that we are not financial advisors and cannot provide investment guidance. Our objective is to discover effective market analysis solutions through testing various strategies, which could be beneficial to our community.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS, IN GENERAL, ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Disclaimer - No representation is being made that any Forex account will or is likely to achieve profits or losses similar to those shown on backtests in this forum. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. All information on this forum is for educational purposes only and is not intended to provide financial advice. Any statements posted by forum members or the MT4talk EA Tester Team about profits or income expressed or implied, do not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold the MT4talk team and forum members of this information harmless in any and all ways.
Affiliates Disclaimer - The website may have links to partner websites, and if you sign up and trade through these links, we will receive a commission. Our affiliate partners are FXOpen, FBS, LQDFX, and MyForexVPS.
Copyright MT4talk.com Forum Rules - Privacy Policy.