There are two ways how the forex market can be traded.

Fundamental analysis or technical analysis.

Fundamental analysis involves assessing the economic state of a country, and by extension, the currency. It does not take into account currency price movements. Rather, fundamental forex traders will use data points to determine the strength of a particular currency.

These types of traders will analyze the country’s inflation, trade balance, gross domestic product, growth in jobs numbers and many other benchmarks to find their trading opportunity.

Technical analysis involves pattern recognition on a price chart.

These types of traders will look for price patterns and based on the pattern, these traders will determine the entry and exit points. Unlike fundamental traders, a technical trader is not as concerned about why something is moving because they go by the trends and patterns on the charts.