Types of market analysis

Types of market analysis: what types of analysis exist?

To trade profitably, every trader analyzes the market. There are two types of analysis: fundamental market analysis and technical analysis. Technical analysis, in turn, is also divided into several subspecies. Let's consider everything in more detail.

Fundamental analysis

Before starting trading on the market, first of all, each trader conducts fundamental market analytics, which includes changes in economic, political, and social events. The best tool for analytics is the economic calendar.

It reflects the news that takes place in different countries. All news are divided by their importance into three groups:

— weak news, such news has practically no effect on changes in market prices;
- medium news, can have a certain impact, causing short-term impulsive movements in the market;
- important news, it is such news that can not only change the course, but even turn the market movement in the opposite direction.

Before starting trading, you need to find out when, at what time the news may come out. For beginners, it can be very difficult to conduct fundamental analysis, so it is recommended not to enter the market during the release of important news. In simple words, it’s just not worth trading at this time.

More information can be found in the section: fundamental analysis.

Technical analysis

Such analytics is carried out using graphical constructions or using technical indicators.

During graphic constructions, various lines, graphic figures, support/resistance levels are used.

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If a trader uses technical indicators, then he analyzes them, looks for the most convenient moments for opening deals, that is, he finds market entry points.

Candlestick analysis is widely used by traders. To use the results of such a forecast, you need to study Japanese candlesticks, candlestick configurations, patterns. They will have to be learned by heart and be able to find on the chart.

The more often a beginner conducts candlestick analysis, the faster he remembers candlestick patterns with the help of which this type of market research can be carried out.

More information in the section: technical analysis.

A little about candles

Japanese candles came to us from the distant and beautiful country of Japan. Previously, candlestick analysis was considered a secret technique of the Japanese. Years have passed, now traders around the globe are assessing using this technology.

The price change is expressed in candles. A candle has a body and a shadow. The shadow indicates the high / low that the price has passed over a certain period of time. Candlesticks can be used to find out the opening and closing prices.

Professionals have developed entire trading strategies based on candles. It is imperative to know the most frequently occurring candlestick patterns, such as Evening Star, Hammer or Hammer, Bullish Engulfing, Bearish Engulfing and others. Candles are grouped into groups called candle configurations.

They are:

- one candle configuration, consisting of one candle, for example, "Hammer":

- two candlestick configurations, for example, engulfing patterns (the second candlestick absorbs the first one, this indicates that a reversal is taking place in the market):

- a lot of candles, for example, the Evening Star:

There are several dozen such patterns, for beginners it is enough to study only the most basic ones, the rest of the patterns will be studied as they gain experience and skills.

Also widely used are such graphic figures as: a triangle, which can be of several types; "double bottom" or "double top"; There are also triples.

Candlestick analysis helps to analyze the state of the market and predict its future direction.

wave analysis

It is considered the foundation in making technical forecasts. Thanks to this review, the trader can find out the duration of the market movement. This is quite a difficult study for beginners.

The main disadvantage of this type of analytics is subjectivity. Using wave analysis, you can only find out the direction of the trend movement, calculate when it will end, but it is impossible to get any recommendations or calculations for entering the market.

This evaluation method is performed graphically, that is, by drawing graphic lines on a graph. According to the theory of wave forecasting, there are 5 waves, each of which has its own sub-waves.

It is in such waves that almost every beginner gets confused, even professionals, and those who evaluate the market by the method of wave analysis are not objective.

There is also no constancy, it has insufficient formalization, it is constantly changing, due to which subjectivity occurs.

fractal analysis

Fractals are high or low prices. Each fractal is formed due to the uniform increase / decrease of the previous candles. There is a technical indicator developed by one of the well-known Forex founders Bill Williams. It is called the "Fractals" indicator.

Based on fractals, several trading strategies have been developed that work perfectly and traders get very good results from them. For example, a trading system for the breakdown of fractals.

Fractal analytics is a rather complicated method, but if you apply it correctly and learn how to use it correctly, you can get high profitability. Such a forecast helps to know in which direction the market will move.

For example, after the breakdown of a fractal, the market may pass several tens, sometimes hundreds of points. Naturally, in this scenario, the trader will earn very well.

The article discussed the most important types of market analysis frequently used by traders. You must always remember that before opening any transaction, it is necessary to carry out an analytical forecast, choosing the appropriate type of analysis for yourself.