Classic Technical Analysis Tool Flaw for Today’s Forex Trading

Classic Technical Analysis Tool Flaw for Today’s Forex Trading

In forex trading, the usage of Technical Analysis tool is common. This is indeed useful tool, but you should know more about it.

What is Technical Analysis Tool?

For you who are new in Forex trading, Technical Analysis tool is the tool that has capability in predicting or speculating the Forex market movement. This tool will be able to read the price movement. It uses special formula that calculates many different factors, from the pattern in the past to the current world economy situation, to provide the information. The information that you can get mostly are price movement, trading pattern and many more.

Technical Analysis is actually an old tool. The formula or price pattern in it has been used since 115 years ago. The first implementation of this formula was on stock market. Today, many tool creators use the same price pattern to provide the tool that you can use for Forex Trading. And, this is where we can find the problem.

Price Pattern

There are two different type of price pattern you can find in Technical Analysis tool. They are reversal price patterns and continuation price pattern. The problem lies on reversal price pattern.

The reversal price pattern is used to tell you, when the trend will be reserved. Some of patterns that can be identified with this formula are Diamond Pattern, Double Top/Bottom, Head and Shoulders, and many more. 

However, the price pattern this tool used here is the old price pattern. This old price pattern combines price movement and trading volume. For stocks market, this formula will work fine. However, today’s Forex trading doesn’t use trading volume as the factor to calculate the trading. The reason is the trader can’t check the volume trading information.

Yes, Technical Analysis still can give you information about Forex trading correctly. However, the factor that can make the result going array is still there. You don’t want to rely on the tool that can give you wrong information at the critical moment for your investment and fund, don’t you? 
Therefore, it’s good idea, if you look for the tool that has latest formula and price pattern in its system. With that you will be able to get correct and accurate information, which will become your base to make decision. Remember, making right decision in forex is the core of successful trading. Of course, good strategy and skill is also necessary to have.


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