Optimizing MACD-Stochastic Setting to Boost Your Profit

The Moving Average Convergence Divergence (MACD) is a fundamentally flawless tools/indicator and extremely basic to identify changes in determining the support-resistance. Aside from this, MACD additionally perceived as less flawless considering the lagging reaction. This is the motivation behind why a significant number of traders include different instruments in their framework to tune up their gains. One tool that usually included is Stochastic oscillator (SO). By joining both SO and MACD, it is feasible for someone to acquire better decision making a supportive system that is progressively proficient, dependable and presenting a few difficulties to elucidate.

 

The system underneath is disclosing how to join MACD and Stochastic to enable your trading gains to a higher level:

 

The MA Convergence Divergence (MACD) Setting

The MACD is an indicator/tool that consists of two moving lines that measure the currency pair price momentum. The momentum itself is clarified as the elements of support (it doesn’t mind in the event that you don’t get it. Our goal is to get the setting, right?). The two bends are actually lines delineating exponential MA (the default setting is 12 and 26 sessions). Their gaps as well as the cross of two lines—primary and signal—can foresee changes in course of support-resistance. The momentum begins when the gap between the two bends is expanding, as it were the energy increments and affirms the trend/pattern. At the point when the bends shrink and afterward cross one another, the force is decreased and a change of trend is suggested.

To make it simpler to peruse these errors, it is conceivable to utilize an outline that appears as a solitary line: the MACD oscillator. It communicates the contrasts between two main-signal lines by subtracting the 26-last-candlestick MA to 12-last-candlestick MA. This is usually called convergence-divergence. The 9- last-candlestick EMA is sometimes included as flag line, and each time the oscillator line crosses over that 9-period EMA, it is considered as long position. For selling position, it works vice versa.

 

The Stochastic Oscillator (SO) Setting

SO is an indicator/tool that analyzes the price of a determined time to its pattern (high-low price) over various periods. It has been viewed as evidence that in case of an uptrend, the closing is close to their highest price, while on a downtrend, it close for the most part nearer to their lowest. A signal is given at whatever point %K of the SO crosses %D—a moving average of three periods of %K.

Definitely, the formula takes the form of a curve, framed by two limits. The upper limit—commonly used level is—80% or more above this, the price is believed as overbought and therefore likely falling. In an inverse way as to a lower limit, 20% and beneath, currency price looks attentively oversold and so is likely to climb up.

 

Using MACD-SO Double-Crossover to Maximize Your Profit
A bullish-starting MACD corresponds to a bend that goes above the mid-line (usually depicted as green histograms) and a bullish-starting SO is the point at which the %K goes over the %D (blue part of the graph—this color might be different among platforms). The mix of the two tools/indicators, in other words, the “Double-Crossover” strategy is a powerful tool of price raising. In addition, for the downtrend, the rule goes in the opposite way. The perfect timing for opening position is when the histogram of MACD passes the mid-line a bit after the Stochastic. This can be considered an affirmation. Otherwise, it is a high opportunity to the move to create a bogus caution.
This Double-Crossover procedure allows people to improve a better market/order position even when in trending or reversal situation. Nonetheless, traders need to find a blend of times to consider. The MACD dependably give a late flag contrasted with stochastic. Once, it acts as confirmation of stochastic while in other time traders might be late to enter the market. Especially when the sideways condition happens.

Forex Risk Management, The Introductory

We are here attacking the first lesson of what we call “the work of the trader”, ie everything that does not strictly concern the analysis … If you ask yourself what trading can ask for as competence to apart from the analysis, you are in the right place.

What is risk management?
Risk management, also known as money management, refers to a set of rules and principles that will allow you to maximize the efficiency of your operations, and avoid taking too many risks, or at least risks that are not mastered.

For some people, these principles will seem obvious. However, keep in mind that when you really invest your money, you do not think so lucidly. We are won by stress, fear, and hope , which can sometimes “pollute” our ability to make rational and effective decisions.

This is where risk management comes in.

In fact, by setting strict rules in advance , we manage to overcome the difficulties caused by emotions such as fear or hope, two of your greatest enemies when it comes to trading on Forex.

Risk management is a somewhat tidy concept, so we are going to teach you here the most indispensable notions, the ones you will need directly at the beginning of your trading career.

Managing your capital

Main rule: do not use too much of your capital

Here, the notion of available margin is paramount. As a reminder, the margin available is the amount on which you can intervene, taking into account the leverage effect. For example, if you made a deposit of $ 1,000 on your account and you use a leverage of 100, your available margin is $ 100,000.

However, you should never use too much of your available margin, be wary of the leverage allowed.

For example, in the previous case, if you take a big position relative to your capital, for example on 50000 units, each variation of 1 pip will represent 5 dollars.

So, with 100 pips in the opposite direction of your position, you are already losing $ 500, which is half of your capital .

And once you reach 200 lost pips, your capital has gone up, and you’re going through what’s called a “margin call,” which means that the broker automatically cuts your position and your account is at zero …

There are no precise rules to know what proportion of its available margin should be used, but in the present case (deposit of $ 1000, leverage of 100), it seems advisable to limit oneself to positions of 10,000 units, where the value of the pip is 1 dollar over EUR / USD.

By prudently using your capital, you will be able to cope in the event of a transient change to your position. You will be able to hold the position until the trend becomes favorable again (if you have good reason to think that your position is always wise and you have simply made a timing error).

To conclude, do not be too greedy . Admittedly, the bigger the position, the faster and faster the gains, but we must not forget that it also works with the losses!

Pay patiently for gains on reasonable positions, increase your capital, then increase the size of your positions, this is the best way to be sure to last in trading.

Risk management of positions with stops and limits

We have previously learned to manage our capital, now learn how to manage our positions. In this field, the notions of Stops and Limits are paramount. Let’s start with the definitions:

Stop: We call stop the limit of maximum latent loss that is fixed. This is the threshold from which we consider that we were wrong in our position, and that our analysis is false.

That is, we cut our positions as soon as the stop is reached. For example, you buy EUR / USD at 1.3060: If your stop is 10 pips, you will set it at 1.3050, and cut your position at this price.

Limit: A limit is the opposite of a stop. This is the goal of gain that we set. This is the threshold from which we consider that it is wiser to cash out your winnings than to hold the position. Specifically, with a limit of 10 pips, if you buy EUR / USD at 1.3060, you will sell at 1.3070.

Stops and limits can be defined “orally” or automatically , which we recommend.

You can automatically place stop and limit orders on your platforms, so that positions are automatically closed if they have reached the stop or limit.

The usefulness of stops and limits
The interest is obvious in the case of stops: Avoid being caught in the game of “it’s good, it’ll go back” , because by doing so, you will drag long losing positions, which will undermine your margin and therefore your ability investment.

Our opinion is that if the courses go in the wrong direction, it is better to accept it and move on . Things move very quickly on the Forex, and it is better to accept to have been wrong than to wait for the courses back up and to let go of opportunities.

For limits, it will be to avoid being “too greedy” waiting too long before taking his winnings on a winning position. Many traders doing this have been surprised by the speed at which prices fall after a spike …

An old stock market adage says that trees never go up to heaven, and it is better to take profits early than to wait too long and face a brutal turnaround that will wipe out your winnings.

We strongly advise you to place your auto-stop stop and limit orders right after your position statement, and not to touch it anymore . Once the position is taken, we are not so lucid, and we may be tempted to disregard the rules we have set, which is usually a bad idea.

In addition, with automatic stops and limits, you will not have to monitor the position closely, which is more comfortable.

How to choose stops and limits?

Firstly, we must know that the more we invest in the short term, the more our stops and limits will have to be tight. Then everything depends on your strategy, everything depends on the risks you want to take …

However, it will be necessary to ensure that your limits are always wider than your stops.

Your winning positions must earn you more than you lose your losing positions.

But this principle alone is not enough to properly position its stops and its limits. Indeed, the risk management intervenes in the choice of the levels on which one will set its stops and its limits, but the analysis also intervenes.

Conclusion

To conclude, risk management aims to help you overcome psychological errors, mistakes that can lead you to make your emotions. But for that, it is also essential to know each other well, to know the psychological biases that the trader is often subjected to: This is the subject of the following lesson.

Best Moving Average Settings for Daily Trading

Moving-average (MA) are traditional indicator that are commonly used by traders, both beginner traders as well as skilled and professional traders. Its usability and brilliant capacity to peruse (detect) long-term trends make the MA as the first known indicator of novice traders. There are numerous variants of the MA created by experts. Starting from as simplest as average of certain candle periods to the most complicated formula that consider a specific level of significant value.

MA’s are considered as a lagging indicator. Considering this, many people are competing to refine the basic formula by entering new parameters. Until now, there have been no fewer than 45 types of MAs with various variations.

Enough with all the background regarding the MA. Now the most important thing is, how to set the best MA so that we can get optimal profit.

The basic concept in setting up a Moving Average

Once again we must remember that MA is an indicator that recognizes ongoing trends. With this premise, we know that trends are very closely related to time. Trends in the past week can be very different from the current trend in the past month. Especially compared to the past six months, the last year, the last five years, even the last 10 years. It is possible that in the last one year the price of a commodity or currency pair is in a downtrend, in contrast to the condition of the past week where prices are continuing to move up.

Based on this, then in using a MA we must consider a minimum of three periods which are our references, namely short, medium and long periods. As a variation, maybe you can also use two short periods and one long period. Which is better than both? I would suggest the first one more. Why? Using two short periods may be good at determining your entry point, but you lose a period between short and long periods. You will lose a connecting bridge that illustrates the correlation between short-term movements with long-term trends. This is very dangerous for your trading, especially if you are a beginner trader.

So, whether you use a combination of daily-weekly-monthly or monthly-quarter-semester or even quarterly periods, I still recommend that you always use a combination of three short-medium-long MAs.

Recommended period numbers

The MA period which is usually recommended by default is 14. Beginner traders usually do not understand where these numbers are obtained. This is given as it is, and is usually used for granted. Some will add or reduce it, but how much is needed, nobody knows. Each changes it as they wish. Here I will explain how I determine the number.

I am a daily trader. You certainly know the intent of the daily trader I mean here. Yes, I make transactions with an average of no more than one day open and close. So, I use the daily trend period compared to the weekly trend with a monthly long-term trend reference.

As a daily trader, I used to use the 1H timeframe for my trading. Sometimes I jump to M15, but I don’t do it too often. Sometimes I also see H4 as a consideration, but I very rarely trade on this timeframe.

So, I will suggest period numbers for daily traders. Can these numbers be used by long-term traders or vice versa the scalper? It could be, of course with a little adjustment.

Basically I divide the trend period with the timeframe I use. This is the period number key that I use. For example, if I want to map the daily MA period on the 1H timeframe, I use number 24. This number is obtained from how many 1-hour candles are produced in 1 day. I use the same method if I want to describe the weekly trend in the 1H timeframe. The formula that I use is the number of candles in a day multiplied by 5 days (active trading days in a week) equivalent to 120. Next, to get an overview of monthly trends, the multiplier that I use is an active day of trading in one month equal to 480. (Note: the number of active trading days in one month varies between 20-22, so I am rounding to 20 days).

Thus, I have gotten an overview of trends in the short (daily), medium (weekly), and long (monthly) periods, namely 24, 120, and 480. It is easy right?

What about scalpers or swinger? You can adjust the period by considering the things in the Best MA Setting for Scalper and Best MA Settings for Swinger

How to Determine the Correct Settings for Your Stochastic Oscillator

I will be honest with you. I am a fan of Stochastic Oscillator. Although there is one stream of traders who say that Stoch-Osc is an outdated indicator, I still think that this is an interesting indicator. What reasons underlie my interest? For me, Stoch-Osc is one of the best indicators that can predict when prices will stop (either for a moment or so).

Some of my trader-friends don’t believe. They say that Stoch-Osc often gives false signals. I say, yes you can or otherwise, BIG NO. It all depends on how you determine the correct settings for your Stoch-Osc.

The first thing to understand… Definition?? Hmmm… yeah…likely.

First of all, where does the name Stochastic come from? Stochastic means that comes from chance and probabilities. Well, the chance is not very inviting for who wants to invest in the currency market, right?

For those who have done little probes, stochastic it reminds of things. A stochastic oscillation is a representation of the random variable evolution over time.

A large part of theoretical finance applied to the modeling of financial products (derivatives or not) is based on the study of stochastic oscillation since mathematicians and financiers try to describe the evolution of currency prices by a random walk.

The basic concept, “slow down before changes”

Stochastic oscillation of momentum composed of two curves. An oscillator, as its name suggests, oscillates between two values ​​or around an axis. Our Stoch-Osc is bounded between 0 and 100. This means that it cannot exceed these values.

The momentum is by analogy with physics and mechanical inertia. When the price of action is moving, depending on the strength of the movement, it takes time for it to change.

Its inventor, George Lane (1921 – 2004) was a futures trader in Chicago. This indicator is sometimes called (though rare) Lane’s stochastic. George Lane had observed that a projectile shot in the air, before turning to fall, must first slow down.

The Stoch-Osc, therefore, helps the trader to determine when the momentum of the currency market price turns around and this makes it possible to anticipate the price reversal.

It identifies the possible reversals by analyzing the position of the fence in relation to the range of the session.

How to use Stoch-Osc? Over-bought / over-sold

Usually, we draw two horizontal lines on the Stoch-Osc :

  • a line at 80
  • a line at 20

When Stoch-Osc is above 80 the title is said to be overbought. This means that the bulls have been the winners for some time and that the value has benefited from an increase during the last sessions.

When the Stoch-Osc has a value lower than 20 it is said over-sold. The currency suffered a decline due to bearish activity.

 

Examples of Stoch-Osc  Uses

Example 1

On the graph above I represented signals generated by Stoch-Osc. These are classic signals.

On the left, a strong correction ends with a lateral drift. The Stoch-Osc makes the rase motte. In this case, we expect it to come out of the 25’s (or 20’s – I put the horizontal lines at 25, 50 and 75).

We then have a range of trading range after a small rally in which a sell signal could have been an opportunity to lighten the position. It’s hard to say whether to settle the position or not. The correction was weak and we went to a low level. An indicator like the S-Filter let us see the strength of the trend.

However, Stoch-Osc, which is rising just below 50 after the weak correction, may prompt us to return again.

The chartist analysis also indicates a broken triangle at the top (end of April).

The period of the trading range is a blessing for the trader.

On the right, I think there is a bullish setup. The last sell signal is a small correction and the resistance is broken. This is a triangle from which one comes out at the top.

As we can see, the use of Stoch-Osc s does not dispense with the use of chartism or other indicators. The most classic is to use the MACD with Stoch-Osc.

 

Example 2

In (1) we did a short sale. The courses go down. We can ignore the purchase signals of the Stoch-Osc because the corrections are very small, a sign of a good downward trend.

In (2) we have a trading range that starts with a lateral drift. There we can exploit the signals.

The range support is finally broken down and we have a new bearish rally in (3). Note that in (1) and (3) Stoch-Osc remains stuck under 20%.

In (4) we have a new range. The indicator, however, is struggling to pass above 80, limiting opportunities to make gains. We will be careful in these cases.

Nevertheless, the range takes place in a low zone (after a good correction), so we will favor the long positions (we have a kind of cup not very clean: the courts are preparing to go up).

And we will have been right to do it. The resistance is broken. A bullish rally is started in (5). We will ignore sales signals. If we want to take profits on a part of the position they will give us the opportunity.

At the end of (5) the upward support is broken. This is where you have to close the position and/or take a short position.

 

Note: we could have averaged downward on the green arrows. It’s dangerous, but it pays when we are SAFE that we are not in a downtrend on the higher UT. But, I repeat, it is a dangerous game reserved for the craziest or most seasoned.

 

The trick is that all positions close positively as soon as prices rise a little. This involves the centroid of positions.

How to Trade the News — An Exact Method Every Trader Should Know

Let’s discuss “the news-trading”. This strategy refers to a trading method that only used near the news release.

There seems to be a lot of different ways that you could trade the news, name one of such, bracket trades. The plan is that you can look at the direction that goes and try to trade with it.

Yet, we have a completely different take on how to trade the news. We don’t think the right way to go is following the cows, following the herd as it goes up or as it goes down.

We believe there’s a smarter way to trade the news. So, what we want to show you is how to trade the news properly.

What we want to show you first is an exact way to:

1. Understand when news events are going to come out. There’s a few ways you can get this information, for this article instance, the Bloomberg economic calendar of December 13th, 2011 that we’re looking at and we can see that there is Retail Sales at 8:30 labeled by a red star. So, we use the economic calendar and look at only the red stars because these items right here are market movers.

These are the things that move the market and so we know that there’s a news event occurring ahead of time and we should be prepared for it.

What do we know about trading the news? Well we know that a news event comes out and particularly right before a news event, the market gets very slow. Therefore, we can expect the market to slow down or to tighten or the whipsaw. The channel can absolutely look at a smaller, tighter range occurring before the news, as traders wait for this special number to come out.

We shall wait for the news event to come out and do nothing.

So as you see it here this large red candle right here was the result of whatever economic news event occurred whether it was good news or bad news it doesn’t matter. This red candle is the result of whatever the report stated.

Now, this typically what happens: I do not know the future when a news event comes out; and it’s a red bar; a lot of traders say well this markets going to go down; I’m jumping in short.

Yet, really there is no known fact that a negative news report will result into a downward market or a guaranteed result that it a positive news event is going to result into the market going up. We really can’t base what we’re trading on that alone.

2. Now we relate to this candle as a chaotic candle based on a news event occurring and we look at it as if being red or green.

Since we concentrate them, trading price and price action, we’re not using any indicators whatsoever. That’s the beauty about the way we trade here. There are absolutely no indicators used. This particular method is only using price to dictate what we do moving forward.

3.Verify the candle; whether it is red/bearish or green/bullish.

In this case, simply it’s a red candle (look at the image) and therefore we’re not going short. We’re going long. We want to do the absolute opposite of this candle reaction to the news.

But we’re going to be smart about it. We’re going to do it with specifics objective rules and moving into the future. We want to have proof. We are going to let price prove that to me that we are going long.

4.Open an opposite direction after confirmation

So as the market starts moving into the future, you can see that traders that were short the market based on that news event are now having a little bit of a problem. They have to cover their shorts or get out at a stop or even reverse because the market is not moving in their favor.

Hence what occurs next is that the market explodes to the upside and the reason why you see this large green bar as a result of the traders who got in short initially based on the news event being wrong and having their stops hit or hitting that reverse button and initiating a huge move in the opposite direction.

Bottom Line

We’re entering long this market when two consecutive bars close on the opposite side of the highest high of the red bar (chaotic candle).

Note: if this was a reverse, if that candle was green that in that initial move of the market reaction to the news was green, We’d look to be doing the absolute opposite. We’re looking to go short when two consecutive bars close below the lowest low of that green bar.

So in this case, this happened to be a bullish move to the upside and it occurred because of that news event effect.

Now as you can see that the market exploded to the upside We think this is a very direct way to trade the news. It takes all the guessing out. It’s objective. It’s clean. We know why we’re entering and we have the proof.

 

What are the Factors Affecting Gold Prices?

Gold price varies by its supply-demand. Naturally, the first question that comes to mind is “What is the factors affecting gold supply-demand?”. According to some experts, there are four major factors that affect gold prices. The change in these four basic factors will lead to changes in supply and demand, which will result in changes in gold prices, which is:

  1. Global Inflation
  2. Global Liquidity
  3. Global Geopolitical Risk
  4. Global Real Interest Rates.

 

Let’s dig some deeper insight:

1.Global Inflation

Inflation is the indicator that measures the increase in the general level of prices with the simplest definition. In an environment with inflation, the purchasing power of the money decreases, for example, 2 meters of fabric last year, which we can take up to 10 lira. So in summary, as we mentioned earlier, money has a lowering effect on the purchasing power. That is why investors increase their gold demand to protect their money. It would not be wrong to say that in the environment where global inflation is present, there will be increasing pressure on gold prices.

2.Global Liquidity

Global liquidity and gold prices are directly proportional. As liquidity ratio increases, gold prices are expected to rise and gold prices are expected to decrease as liquidity ratio decreases. If we interpret this in the simplest way; get 10 kg of apple on one side, 10 pounds of apples on the other you can get 10 pounds el apples are still 10kg while all available money to 15 TL to get all of the apples you will have to give the entire 15 lira. In the first case, when the weight of apples is 1 TL, the weight of apples increases to 1.5 TL with increasing money (liquidity). I mean, if there is an increasing supply of money (liquidity) across the limited resource gold, the price of gold will rise. On the contrary, gold prices will move in a downward direction.

3.Global Geopolitical Risk

Gold is the indispensable investment tool of investors in terms of not only global geopolitical risks but also all risks that may occur in the world. In the most remote countries of the world, it can be converted into cash, in the most developed countries. With the fact that gold is so convertible, we can say very clearly that the address of any global risk avoidance will be gold. It would not be wrong to say that global geopolitical risks and gold prices may rise in countries where the gold trade is high. With the simplest example, it is possible to see that even the smallest risk in the region is reflected in the oil prices, as the oil exports of Iraq and Syria, which are in the war now, constitute the most important part of the world’s oil exports.

4.Global Interest Rates

In its simplest definition, the real interest is the cost of the retained money. If you have 100TL money you have not invested in your bank account for 1 year, if you think that the real interest rate is 5%, your money will actually lose 5 TL. I mean, the cost of keeping your money is 5 TL. However, if you invested 100 TL in the rate of 5% real interest rate would be 5TL. As a result of Gold’s own structure, any periodic returns do not provide investors with any interest gains, except for the change in market prices. In a period when real interest rates are in an upward trend, investors prefer investment instruments instead of gold. As a result, it will not be wrong to say that gold prices will move downwards.

These four factors are among the main reasons that directly affect gold prices. Contrary to what most of us know, ”summer is coming, everyone will get gold, gold prices increase“ is absolutely not true.

Introduction to Technical Analysis

Technical analysis (to simpifly the writing, this term will be replaced with the word “technical”) is one way to one approach to exploit prior market movements. Technical is predictive. This is done by assessing prices, volumes, and other things through various indicators. Technical is independent of economic science, and is more related to science, such as psychology, mathematics, statistics, and physics.

As indicated by the fundamental rationale of technical, each factor that may influence the price movements of the pair is reflected in the prices. In other words, prices are a kind of barometer. In technical, past market movements are the reference. According to the logic of technical, a price movement that occurred in the past will occur again in the future. Therefore, technical is useful for understanding the dynamics of the pairs.

In the ISE, where the depth is quite low and therefore artificial movements occur frequently, technical methods are often unsuccessful in small company shares. For this reason, it is possible to create artificial movements, especially in small company stocks in the ISE and similar deep markets, which are large for small investors but with a relatively small fund for the market mechanism. The fact that these movements, which are described as charting or making wood in the stock market jargon, are almost impossible to create in the forex markets with a daily average trading volume of 2 trillion dollars, significantly increases the success rate of technical in this market.

As in other markets, the psychology factor plays a major role in the forex markets, where macroeconomic data is mostly on the agenda. When we look at the Forex markets, it can be said that the data are directing the prices by creating supply and demand. However, the main basis of the prices is the expectations and perceptions of the markets about the data rather than the data itself. For example, disclosure of positive data in a pair trend is rather, it usually results in an increased response. Negative data in pair in rising trend may cause limited decreases. Exceedingly high expectations of the data may also lead to hard-rung movements. Realizations beyond expectations can create excessive optimism or panic effects on mass psychology.

AN EXAMPLE OF THE HISTORY OF MASS PSYCHOLOGY ON THE PRICE: TULIP MADNESS
The tulip, which was taken from the Ottoman Empire to the Netherlands at the end of the XVI. This wonder of tulip which is a new flower will soon be in serious demand.
He had created. The sale of grown tulips led to the purchase of more expensive tulip bulbs. Although the tulip was only a plant in real terms, it was perceived as a status symbol, and the interest of the poor Dutch was causing new demands and therefore new rises. The prices have climbed so much that commercial agreements began to be made over tulips and people began to mortgage their homes against tulips. While this crazy process was continuing, the emergence of tulips in the unique and colored way as a result of the mutation of a virus increased the prices even more. The madness peaked in 1636 it was possible to buy a land of twelve acres with a tulip bulb or a luxury manor in Amsterdam. In some sources, even a wealthy citizen of France, the brewery in his country to a Dutch citizen, a tulip bulb sold sells against. However, the fact that the expected mutations did not occur in 1637 led to the sale of tulips and the fact that almost all investors had invested all their assets in tulip bulbs. Such that prices fell by 95 percent in just one week. Every day, dozens of investors started to commit suicide by jumping into the canals of Amsterdam as a result of this madness.

This financial balloon, which is also the subject of the famous French writer Alexandre Dumas’ Black Tulip, is still a much-discussed issue, although it has been around four hundred years. As in the case of tulip craze. As a result of the excessive demand caused by social hysteria, the fact that prices have pushed the logic boundaries clearly reveals the importance of psychology in financial markets.

Today, due to the advancement of technology and the accumulation of knowledge, the diameter of the financial balloons is much smaller. However, it should be kept in mind that the 2007 subprime crisis, which still continues its effects, is caused by the bubble in the real estate sector.

POINTS OF THE TECHNICAL ANALYSIS
While technical has been successfully implemented by many professional investors, some investors and analysts prefer fundamental analysis based on the science of economics and finance, rather than this method of analysis whose scientific is discussed. There is even widespread prejudice among investors and analysts that technical is a fortune-telling or modern alchemism. Since the technical is a relatively new method of analysis, it is still a matter of debate in academic circles. But technical refers to the sciences such as psychology, statistics, and mathematics. For example, Fibonacci analysis is a scientifically proven method and is based on mathematical science.

The increase in technical results in acceptance in some academic circles and more media coverage.

Many traders and analysts can only use technical or just fundamental analysis.

Fundamental analysis is a method that requires knowledge and experience in economics, politics, and finance. By using this method, it is possible to foresee the future movements of any pair. However, market movements often do not take place in prescribed times and conditions. Therefore, it is sometimes misleading to invest in fundamental. Technical is far from economics, policy, and finance, and the reference point is price movements. For this reason, the trends and formations, which seem to be quite strong, may only be attractive for investors considering technical. However, the realization of the data and expectations that occurred in the data, such as September 11 and so on. In the case of extraordinary developments, the error of technical is much higher than the fundameantal analysis.

Because of these and similar risk factors that exist in both methods of analysis, it is possible to make investments by synthesizing both methods of analysis and give more accurate results in short-term investments such as forex. For example, technical of a pair with predictable direction can be carried out with fundamental-analysis and more accurate results can be made. As can be seen from these examples, the timing of an investment decision taken with fundamantal analysis is generally left to the technical, which generally yields accurate results. We can only compare an investor who invests based on fundameantal analysis to a cardiologist who decides to perform a bypass operation without looking at ECG graphs. Cardiologist, for many years without examining the rhythms of the patient’s heart.

The knowledge and experience gained as a result of the academic training process can be of no use if the rhythms of the patient’s heart are not examined. Similarly, the investment decision based only on the basis of analysis can have very negative results when the market movements are taken without examination. As a result, it is a great risk to take an investment decision without examining the movements of the market.