You might look at the stock prices at the bottom of your television screen or, if you are trading currencies in the forex market, you might look at the exchange rates go up and down your computer screen.

Prices move and you wonder whether their behaviour means something.

Could the market be sending out signals that you can use to make your decisions? How, exactly, are you going to study the market?

For anybody to make money from the market, they must have a way of studying it.

There are predominantly two approaches: fundamental and technical.

Fundamental analysis focuses on value but this is the subject of another article. Technical analysis, on the other hand, focuses on price and its movement.

The movement of price has the following properties which traders can study to aid in their decisions:

1. Trend - its persistence to move in one direction,

2. Volatility - the magnitude of its fluctuations on a periodic basis,

3. Momentum - the rate of its acceleration and deceleration,

4. Cycle - its tendency to move in cyclical patterns, most especially in the futures market,

5. Market Strength - the number of transactions supporting its movements,

6. Support and Resistance - its tendency to rise or fall to a certain level and then reverse, repeatedly.

Analysts, using the technical approach of analysing the markets, have developed their own set of indicators, different to those used by fundamental analysts.

These indicators are used to measure the properties of price movement.

Fortunately for modern-day traders like you, you do not have to devise your own tools.

You just need to learn how they work and how to use them.

About The Author:

Marquez Comelab is the author of the book: The Part-Time Currency Trader. It is a guide for men and women interested in trading currencies in the forex market. Discusses analysis, tools, indicators, trading systems, strategies, discipline and psychology. See: http://marquezcomelab.com

In the last years, the Foreign Exchange Market has expanded from one where banks would execute transactions between themselves to one in which many other kinds of financial institutions like forex brokers and market-makers participate including non-financial corporations, investment firms, pension funds and hedge funds.

Its' focus has broadened from servicing importers and exporters to handling the vast amounts of overseas investment and other capital flows that currently take place.

Lately foreign exchange day trading has become increasingly popular and various firms offer trading facilities to the small investor. Foreign exchange is an 'over the counter' (OTC) market, that means that there is no central exchange and clearing house where orders are matched.

Geographic trading 'centers' exist around the world however and are: (in order of importance) London, New York, Tokyo, Singapore, Frankfurt, Geneva & Zurich, Paris and Hong Kong.

Essentially foreign exchange deals are made between participants on the basis of trust and reputation to deliver on an agreement. In the case of banks trading with one another, they do so solely on that basis.

In the retail market, customers demand a written legally accepted contract between themselves and their broker in exchange of a deposit of funds on which basis the customer may trade

Some market participants may be involved in the 'goods' market, conducting international transactions for the purchase or sale of merchandise.

Some may be engaged in 'direct investment' in plant and equipment, or may be in the 'money market,' trading short-term debt instruments internationally. The various investors, hedgers, and speculators may be focused on any time period, from a few minutes to several years.

But, whether official or private, and whether their motive be investing, hedging, speculating, arbitraging, paying for imports, or seeking to influence the rate, they are all part of the aggregate demand for and supply of the currencies involved, and they all play a role in determining the exchange rate at that moment.

Nicholas H. Bang
www.ac-markets.com
support@ac-markets.com