There are two basic ways of analyzing the forex market

Fundamental analysis and Technical Analysis

FUNDAMENTAL ANALYSIS

If you have been wondering how news (either good news or bad news) could translate to big profit or big loss within a short period, then when you understand the concept of fundamental analysis in the forex market, you could figure that out.

News are very important in our lives. We all react to news differently. When the news are fresh, the reaction could be high, when old, we could just wave it out. I know of a man, upon receiving the news about his stolen vehicle, his blood pressure increased, being hypertensive, he died due to this. Remember, the forex market replicates the actions and inactions of we human being. There are global news that are being released from time to time with regards to the currency pairs you may wish to trade. The fundamental analysis deals with the impact of this news, either favourably or other wise within a short period of time

TECHNICAL ANALYSIS

Technical analysis is another way of analyzing the forex market. As it names implies, these are techniques by which you analyze the market. It involves the use of indicators which suggest where the market is heading to. There are lot of these technical indicators that are freely available based on your brokers platform. Some of these indicators are as old as Methuselah. What we have discovered is that they work, when properly when properly applied.

It is not possible for you to say you are a technical analyst while you totally ignore the fundamental news that could affect your indicators performance when they are being released. That is why we say in the market that the fundamental news sometimes override your technical analysis.

These indicators measures the performance of the market reaction. They are classified as trend measuring indicators, the oscillators, some measures the volumes of the market. Below are lists of some good numbers of them.

(1) Commodity Channel Index  (2) Bollinger Band  (3) Average directional Index   (4) Moving average  (5)Parabolic Sar   (6) Standard deviation  (7) Candle sticks pattern  (8) Fibonacci retracement

Oscillators

1. MACD (Moving Average Convergence & Divergence)  (2) Stochastic Oscillators  (3) Relative Strength Index (RSI)    (4) Average True range           (5) Bears Power   (6) Bulls power   (7) Momentum

Volumes

(1) On balance volume  (2) Money Flow Index   (3) Money flow Index

It is not compulsory you use all of these indicators. We have heard and read from a lot of books and 'trainers' that it is advisable that you use just 2 or 3 of them. All these could be good. However, what we advise is that since the motive of these indicators is to suggest the direction of the market, we would advise that you use good combination of them, as many as possible that will suggest a convincing direction of the market and will enable you to form a good decision of the market.

With our experience of training, we do teach a good numbers of these indicators, in our trading, sometimes we may have to switch over the combination of these indicators, sometimes we use just a few, sometimes we may have to add more so as to form an unbiased opinion of the market.

I like the forex trading market for one unique purpose. Upon learning of the art of the trading, you will have to sit down and work on your trading experience, practicals and decide what really works for you, - trading strategy. It could be possible that what really works for you may not really work for another person under same condition.

For example, I started with fundamental analysis and move on to technical analysis which I found more interesting. After training a student of ours, he told me of his wonderful experience on fundamental analysis with proof, I was surprised to see the result. There are lot of things that determines your trading success. Your personality, your traits, your passion, your psychology, your thinking etc. All these may not be the same in every individual.

Forex trading market is very unique and dynamic. That is why you have to be dynamic too as a trader.

There are some of these resource website which you can refer to in the course of your technical analysis for some day to day of the forex market analysis. These are:  www.alpari.co.uk    www.actionforex.com   

What we should understand is that what happens in the forex market is just a graphical reaction of the force of demand and supply as a result of buying and selling of these currencies by you and me. Its not just a kind of picture from the moon. That is why the market is purely a human being.  Having tried some Forex trading robots in the past, we have been able to form a consensual opinion to this market that the best result in this market is the overall understanding of the market with the application of relevant rules and regulations. Forex market is not a get-rich-quickly place. It takes the right discipline, dedication, patience and obedience to rules to become a successful forex trader.

Above all, there are some basic patterns that a trader should watch out for. In the above graphical chart, we see the anatomy of market. At various points of this price movement, there are signals my these indicators showing the next move by the pattern of the candle sticks. A good trader should be able to follow these chart pattern and take necessary action as at when necessary. I love the combination of Fibonacci retracement tool. It is one of the best tool in the currency market. Reason being that is assist, in conjunction with other indicators to suggest your entry level, stop level and take profit level of the market. These are the major element of good trading strategies as you watch out for the candle and chart formations and pattern.