Tuesday, August 4, 2009

Limitation of Technical Analysis on Forex Trading

What is technical analysis?

We use technical analysis in forex trading to make some nice profit, you are basically using a set of technical indicators yo predict which trend they are. These technical indicators could be but couldnt also not for example US Dollar, Pivot points or Moving Average or any of the other indicators that many expert or you may have come across. And actually what do these technical indicators will do for you? They will help you to determine when to tje perfect time to enter or exit a trade of a particular forex currency in certain period of time. It is alright using these technical indicators as long as you are careful in the sense that you understand their importance correctly. we simply cannot download a technical indicator and then apply it blindly to your forex trading methodology. That would be a terrible mistake. You must have a very good knowledge and need to understand their significance. In other words, what we are trying to tell you is technical indicators whatever they are, should constitute just a single part of your overall trading strategy. with this strategy, You could very well look at technical indicators as something that pin-points which the exact entry and exit points of the currency you are currently dealing with. But the very important point is you should never reckon with these technical indicators in isolation. Doing this will be very bad and it can be espousing the cause of the very limitations that these technical indicators possess to your portfolio.

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