How to Learn Forex Analysis

Handful of different currencies each bearing a different relative value.

Learning to analyze the foreign exchange market -- also referred to as Forex -- is an acquired skilled that can be learned by just about anyone willing to put in the time required to learn technical analysis and fundamental analysis. Technical analysis of the Forex market is the study of trends in the exchange rate of a given currency pair or pairs by using past exchange rate data to understand the probable direction a currency pair is heading. Fundamental analysis is the study of economic indicators published by national governments and industry trade associations for the purpose of identifying economic trends affecting exchange rates.

Things You'll Need

• Foreign exchange rate data
• Economic indicators
• Central bank statistics

Instructions

1. Study the macro-economic indicators and the monetary policy of the central banks of the countries whose currencies you are interested in trading or analyzing. This is known as fundamental analysis. Keep track of the important reporting dates on the economic calendar.

2. Study past exchange rate data for the purpose of identifying whether or not exchange rates are increasing or decreasing overtime. Technical analysis consists of plotting past exchange rate data on a chart along with mathematical indicators used to assessed the strength or weakness of the market's trend. Start your study of technical analysis by visiting free educational websites such as Forex Traders and Online Forex Trading.

3. Study foreign exchange rate strategy, which seeks to combine fundamental analysis and/or technical analysis in conjunction with money management for the purpose of deciding how to invest or trade in the Forex markets given your current financial resources. Practice paper trading the Forex market by executing mock trades for an imaginary Forex brokerage account. Keep track of the profits or losses in your imaginary brokerage account.

Tips & Warnings

• Learning Forex analysis takes time and hard work to become proficient. Search out the assistance of an experienced Forex trader or Forex educational training organization to help you learn how to analyze the Forex markets.

References

• Forex Traders: The Basics of Fundamental Analysis
• Forex Traders: A Few General Principles on Technical Analysis
• Forex Traders: Trend Following -- the Most Popular Strategy in all Financial Markets
• Bloomberg: Economic Calendar

Resources

• Forex Traders: Fundamental Analysis
• Forex Traders: Technical Analysis
• Forex Traders: Strategy
• Online Forex Trading: Learn Forex Trading
• Board of Governors of the Federal Reserve System
• U.S. Bureau of Economic Analysis