Three types of Analysis- Trade Market

Three types of Analysis acknowledge in the trade market

Online Trading, irrespective of market i.e. currency, stock, has 3 basic analyses which are mandatory to analyse the market. While trading, they help to develop ideas to trade the market. Those are:

  1. Technical Analysis
  2. Fundamental Analysis
  3. Sentimental Analysis

There has always been a debate/confusion about which analysis helps in price speculation but the fact is all three analyses play an important role in analyzing the market.

Technical analysis is all about interpreting/analysing market with the help of technical indicator. It includes stochastic, Bollinger bands, Moving Average, Fibonacci, and many more depending upon the trust the trader has it on.

Next, Fundamental analysis helps to create awareness about certain/specific future events that will take place in each country/company and will directly or indirectly affect the market. So, it is important to keep updated about business news/events. For example, Changes made by the board of directors, Issuing budget, New policies introduced by RBI, etc.

Last, Sentimental analysis as the name suggests is connected to our emotions. Every trader has their own opinion as regards to fluctuation in prices.

Financial Eggs
Financial Eggs

All three analyses are just like a stool ( Market). A stool cannot stand on one leg neither can it stand on two, it needs all three to stand firm.

The same holds true in the market, if any of the analyses is weak, chances are high that losses will be incurred while trading.

Babypips