A forex, or foreign exchange market, is always volatile. But then, currency trading is a very good way to earn money. Owing to the large operation time involved, forex trading generates about $2 trillion in a day. Forex traders deal directly with each other, even with the large financial institutions involved.
Forex traders base their trading styles on either fundamental or technical analysis. These analyses are the same except in how the information gained from them is employed. All forex traders have the option to merge these concepts, but most of them use just one.
Forex traders who can be classified as fundamental traders employ information like data on global and national economies, political situations and even weather conditions. They also make use of knowledge in issues present in companies. These forex traders believe future market prices can be concluded based on the market’s response to these events.
When financial turmoil, political instabilities and natural disasters occur, fundamental forex traders will find think that market prices will go down. Conversely, positive occurrences will mean stock price hikes for forex traders. Fundamentals mostly do not come as individual traders in forex markets.
Almost everyone of them are groups, or institutional organizations. Fundamental forex traders often come with large support teams and since the advent of automatic processing of information, traditional manual analysis is slowly abandoned.
On the other hand, technical forex traders are classified as such because they use the market and trading information they have gathered together with mathematical indicators. Technical information, like past prices and trading amounts, are used in graphs and are always updated in instantaneously. Technical forex people think the only data needed are the price movements because they hold the entire market information. Many technical forex traders are individuals, owing to the fact that technical analysis can be easily automated since it is mathematical.
Technical forex people base their trading moves solely on computed trading signals. Emotions play no role in their judgment. However, the risks are there still because no math model at hand is perfect.