Assumptions about Technical Analysis:
There are basically two types of analysis that help the forex traders to understand and predict the price movements in forex market. These types are 1) Fundamental Analysis 2) Technical Analysis. There are different myths and assumptions about these analysis that are definitely wrong. Such assumptions misguide the newbies in forex trading. Let’s explore some of these assumptions that enable the newbies to make wrong decisions. Which eventually become the cause of loss in forex trading.
First of all the most common wrong assumption about technical analysis is associating it with a particular time period or a style of trading. Some traders believe that tech analysis is suitable for day trading while others associate it with computer based trading. There are also some traders who believe that it works well with higher time frames. while others assume that it is perfect for lower time frame trading. All such myths are mere wrongly believed assumptions that have no connection with reality. Actually tech analysis is appropriate for all kinds and styles of trading.
If you properly perform the tech analysis that you can easily predict the trend of market in any time frame. As far as the assumption about associating it with mere computer based trading is concerned then let me clear you tech analysis is an old term and type of analysis that existed even before the invention of computer and technical analysis has been helping out traders even the use of computer in trading.
There are many new forex traders that believe that it is a very easy to conduct a technical analysis while there are also others who assume that technical analysis is less effective and its success rate is very minor as compared to Fundamental analysis. Frankly none of these two assumptions is right. Technical analysis is a complex and time consuming process which requires understanding the forex market. Obviously it is not easy as well. Secondly as far as its effective is concerned there are countless successful forex traders whose success is solely based on tech analysis. No doubts newbies often assume many hilarious facts about the thing that they do not understand properly. Thus instead of assuming why not try to understand technical analysis. I guess it will help you a lot in making efficient trading decisions.