Lesson 6. Technical and Fundamental Analyses

In this lesson, we will address the following questions:

1. How to Choose a Trading Period
2. The Basics of Technical and Fundamental Analyses

1. How to Choose a Trading Period

Are you eager to put your skills to the test now that you’ve got a handle on the basic theory? You are already close to conquering the stock exchange with Pocket Option!

Before investing real money, you should make an action plan. It’s time to learn about the simplest trading strategies on the exchange.

Remember that no trading strategy guarantees consistent profits. You have to constantly adjust your trading system to match what’s happening on the market.

Choosing a trading period

Before you start trading, you should first determine the time intervals that you are going to use.

There are three general options:

1. Short-term trading (scalping) is trading on insignificant price changes over the course of the day. You can open several trades per minute and earn 2-3 pips per trade.

This type of trading is time-consuming and requires constant monitoring.

2. Medium-term trading. With medium-term trading, you have to complete several transactions a day and track the opening of a position while making the necessary adjustments.

This type of trading is based on chart analysis. It will allow you to tear your eyes away from your screen as well, as checking in on your deals once every couple of hours is generally more than adequate.

3. Long-term trading. These are deals that are opened for over a long period of time, from one week to several months. You need to follow global economic news and trends of all levels over the course of the trade. This type of trading is more suitable for traders with a large amount of capital.

There are two analytical methods to predict the price behavior on binary options: fundamental and technical.

Technical analysis

Technical analysis for binary options is the realm of charts and indicators. It allows you to make a forecast of asset values with a short-term expiration date. In order to make the right decisions based on your data, you have to first develop your trading strategy.

Imagine that you only know the current price of gold – $1.784.40 per ounce. Will that price go up or down? It is impossible to know the answer without additional data. What was the price an hour ago, yesterday, a week ago, last month? You currently have nothing to compare your indicators with.

There are many different studies and indicators available to help you identify the current trend and predict further price movement.

Fundamental analysis

Fundamental analysis is a method of forecasting the movement of quotations based on world news and facts.

Trading sharks George Soros and Warren Buffett made their fortunes thanks to FA.

Traders focusing on FA use a deductive method, similar to Sherlock Holmes. Their primary task is to assemble the small pieces of the market puzzle into a coherent whole.

In FA, you need to monitor a whole range of signals: political and economic news, rumors, expert opinions, GDP levels, interest rates of central banks and many other nuances.

In their work, traders often use economic calendars, which are selections of economic news from different countries. You need to be able to highlight important news and determine the market trend that they can lead to in order to forecast correctly.