Technical analysis helps you to organize the overall market picture while it lays the path to rule based trading. Having a technical approach will be very important, specially during your first attempts to develop a personal trading style.There are a lot of ways to analyze market information through technicals and the potential variables are endless. Understanding how to wade through this data is vital at this stage. We will therefore not present you a technical analysis manual but rather insist on the flexibility of a few common indicators and the roles they can play in a trading system. This practical approach will prepare you for the more advanced Units of the Learning Center.
Technical analysis offers the ability to do some things not easily achieved otherwise. That is the reason why many traders include it among their trading tools arsenal. But still many aspiring traders don't fully understand the advantages of technical analysis - and refuse to differentiate between analysis and the other components of a trading plan such as money management and trade execution.
In its essence, a Forex price chart is a simple sequence of up and down pips forming visual patterns. Technical analysis aims to identify these patterns and measure their outcome in terms of probabilities. However, the repeated occurrence of such patterns would imply a certain consistency of the outcomes. But in reality, there is no absolute consistency as each pattern is somehow unique - even if it has some similarities with other patterns.
This underlying dilemma will be present along this chapter and many ideas about how to deal with it will be disclosed..fxstreet.com
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