Historical data is commonly used in technical forex analysis by a great number of traders for they believe that the past forex rates can be used to predict where the price is going in the near future. The popularity of historical data in technical forex analysis can be traced back to one of the most important assumptions; that is history tends to repeat itself. Traders who hold the assumption believe that market participants have, historically speaking, often reacted in a similar way to reoccurring market events. Check http://tradingforex.co.nz for more information.
Therefore, they believe that looking at the past forex rates can be a good way to predict what will happen in the future. Many well-known chart patterns are based on this assumption. Obviously, these patterns would not be evident in technical forex analysis if they didn?t have the data. Moreover, it is also helpful when testing out a new forex trading strategy. If a trader uses an expert advisor, he can run a backtest on historical data to see how the robot will perform in the market by using this forex trading strategy. If he can?t even make any money on a backtest by using the strategy, he should take a second thought of whether to use this strategy in currency trading. People can also visit http://sourcingagentinchina.com for more tips.
Historical data is popular in technical forex analysis for traders believe that they are able to predict the future price movements by referring to the past exchange rates. Traders need to know how to use the data properly to do technical forex analysis well. First of all, traders need to watch various forex charts for they reveal what the past forex rates are and also indicate the potential price movements in the future. By looking at the forex charts, traders will have a better understanding of the future by looking through the past forex rates in technical forex analysis and they will be more confident in making trades. One can also make an investment in the forex trading.
By watching the historical exchange rate of a currency pair, traders will have an idea of whether the currency pair is volatile and whether they are possible to get profits by trading this currency pair. Traders are accessible to the data of a currency pair in the past days, months and even years. If the prices of the currency pair, oftentimes, go from an extremely low to a high or drop suddenly from a high to extremely low within short period, traders will know that this currency pair is highly volatile and they are able to make money by taking advantages of the volatility. In total, historical data is quite important in technical forex analysis. Traders need to use it properly in order to know the market well and make money accordingly.
Source: http://freefinancearticles.info/doing-technical-forex-analysis-properly
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