Ways to Trade Forex

Essentially there are two ways to analyze and make forecasts in a market: Technical Analysis and Fundamental Analysis. Technical Analysis is when a trader looks at past price patterns in order to analyze the market and make any future predictions. This is typically done by looking at charts such as the ones shown above and extrapolating price movement patterns from the past.

The graph below is an example of a typically used chart pattern known as a head and shoulders. This pattern was formed from October 2006 through November of 2007. Because of the nature of supply and demand and psychology of investors this pattern is suggested to predict downward movements in the markets, according to some technical analysis theories.