Market Analysis
Market analysis is an integral part of placing profitable trades, and the two basic forms of market analysis are technical and fundamental. Which of these two will work best for you? Well that depends on your personality, your tolerance for risk, your level of experience, the way in which you learn the best, and how comfortable you are with trading in general.
Technical analysis has to do with looking at the raw numbers of price data and forex charts to make a decision about where the market is and where it is going. There are many people that like to trade forex using a purely technical strategy, and technical analysis is especially favored by people who are into software programming because they can use it to create automated trading straegies.
Fundamental analysis is much further removed from price charts and has more to do with placing trades based on government policies, interest rates, and economic conditions and indicators. This is the method of choice for people who enjoy the thrill of day trading, and for those who have been trading the currency market long enough that they have honed a particular strategy for making money consistently and have no problems taking their emotions out of the equation.
The best advice for choosing which form of market analysis you will work with is to know yourself, what you are good at and where you might be lacking when it comes to your trading. If you find that you have trouble deciding when to exit the market, then technical analysis might be your method of choice because it comes with predefined exit parameters. If you have no problem exiting the market and feel comfortable locking in a certain number of pips on each trade (say 20), then fundamental analysis might be your best bet because this focus the most on when to get in, and when to get out will be determined by your own developed intuitive market sense.
Technical analysis has to do with looking at the raw numbers of price data and forex charts to make a decision about where the market is and where it is going. There are many people that like to trade forex using a purely technical strategy, and technical analysis is especially favored by people who are into software programming because they can use it to create automated trading straegies.
Fundamental analysis is much further removed from price charts and has more to do with placing trades based on government policies, interest rates, and economic conditions and indicators. This is the method of choice for people who enjoy the thrill of day trading, and for those who have been trading the currency market long enough that they have honed a particular strategy for making money consistently and have no problems taking their emotions out of the equation.
The best advice for choosing which form of market analysis you will work with is to know yourself, what you are good at and where you might be lacking when it comes to your trading. If you find that you have trouble deciding when to exit the market, then technical analysis might be your method of choice because it comes with predefined exit parameters. If you have no problem exiting the market and feel comfortable locking in a certain number of pips on each trade (say 20), then fundamental analysis might be your best bet because this focus the most on when to get in, and when to get out will be determined by your own developed intuitive market sense.
Foreign Exchange Trading Intermarket Analysis
How Stock and Commodity Market Prices Affect Exchange Rates
In our global financial system all of the major world financial markets are interconnected, yet the most popular form of forex market analysis, technical analysis, concentrates only on one market at a time. Most traders that implement technical analysis-based trading strategies may use tools such as candlestick formations or moving averages, but they will only focus on one chart or one market at a time.
Technical analysis can still be very useful to a forex trader. After all, the vast majority of all daily forex trading volume is speculative in nature, and all of those masses of traders working at their computers are likely following the same handful of indicators and oscillators, as well as focusing on the same levels of support and resistance. If enough traders are following a 14-day Relative Strength Index indicator then making successful trades based on that indicator becomes self-fulfilling in nature.
In fact, it is possible for you to completely ignore all other financial markets and only focus on one currency pair's chart, and you could still have a profitable trading strategy. However, the stock and commodity markets (with oil and precious metals playing a large role) of a given country will inevitably affect the value of that country's currency, so it would be wise for any astute currency trader to stay aware of the goings-on of other related financial markets.
An interesting development that comes with the widespread proliferation of forex trading is that there is a relative lack of intermarket analysis compared to most stock or equity markets. If you have even a brief knowledge of stock-picking strategies, then you should be familiar with the concept of diversification (spreading your stock picks across different sectors) as well as using a general index of stocks to rank a specific sector's performance.
This is a good example of intermarket analysis, as these equities traders compare stocks across different sectors, small cap versus large cap stocks, and global stock prices versus domestic stock prices. Most commodities traders commonly practice intermarket analysis as well, by comparing related commodities such as silver versus platinum or soybeans versus corn.
There is not nearly as much intermarket analysis in currency trading on the surface as there may be for other markets, but geopolitical events and the prices of other markets all go into the factoring of exchange rates. A wise forex trader seeks to be as informed as possible, and this includes knowing of all other developments, whether it is interest rates or new stock market highs, that can affect a given currency's exchange rate.
A good way that you can begin to implement intermarket analysis into your forex trading is to stay abreast of the values of certain commodities that affect the value of currencies the most, namely oil and precious metals. There are many different precious metals markets, so if you do not want to spend all day doing your price checks then you can focus on just silver and gold (or even just gold alone if you are feeling lazy, since it is the quintessential precious metal).
Another good way a forex trader will use this type of analysis is to focus on the main stock index for a given country (such as the S&P 500 in the United States). If you watch Bloomberg or CNBC while you are doing your currency trading and you hear that a major stock index for a geographical region is hitting all-time highs, it would be a wise bet that the value of the currency involved will also increase.
In our global financial system all of the major world financial markets are interconnected, yet the most popular form of forex market analysis, technical analysis, concentrates only on one market at a time. Most traders that implement technical analysis-based trading strategies may use tools such as candlestick formations or moving averages, but they will only focus on one chart or one market at a time.
Technical analysis can still be very useful to a forex trader. After all, the vast majority of all daily forex trading volume is speculative in nature, and all of those masses of traders working at their computers are likely following the same handful of indicators and oscillators, as well as focusing on the same levels of support and resistance. If enough traders are following a 14-day Relative Strength Index indicator then making successful trades based on that indicator becomes self-fulfilling in nature.
In fact, it is possible for you to completely ignore all other financial markets and only focus on one currency pair's chart, and you could still have a profitable trading strategy. However, the stock and commodity markets (with oil and precious metals playing a large role) of a given country will inevitably affect the value of that country's currency, so it would be wise for any astute currency trader to stay aware of the goings-on of other related financial markets.
An interesting development that comes with the widespread proliferation of forex trading is that there is a relative lack of intermarket analysis compared to most stock or equity markets. If you have even a brief knowledge of stock-picking strategies, then you should be familiar with the concept of diversification (spreading your stock picks across different sectors) as well as using a general index of stocks to rank a specific sector's performance.
This is a good example of intermarket analysis, as these equities traders compare stocks across different sectors, small cap versus large cap stocks, and global stock prices versus domestic stock prices. Most commodities traders commonly practice intermarket analysis as well, by comparing related commodities such as silver versus platinum or soybeans versus corn.
There is not nearly as much intermarket analysis in currency trading on the surface as there may be for other markets, but geopolitical events and the prices of other markets all go into the factoring of exchange rates. A wise forex trader seeks to be as informed as possible, and this includes knowing of all other developments, whether it is interest rates or new stock market highs, that can affect a given currency's exchange rate.
A good way that you can begin to implement intermarket analysis into your forex trading is to stay abreast of the values of certain commodities that affect the value of currencies the most, namely oil and precious metals. There are many different precious metals markets, so if you do not want to spend all day doing your price checks then you can focus on just silver and gold (or even just gold alone if you are feeling lazy, since it is the quintessential precious metal).
Another good way a forex trader will use this type of analysis is to focus on the main stock index for a given country (such as the S&P 500 in the United States). If you watch Bloomberg or CNBC while you are doing your currency trading and you hear that a major stock index for a geographical region is hitting all-time highs, it would be a wise bet that the value of the currency involved will also increase.
Forex Market
A 24-hour market - A trader may take advantage of all profitable market conditions at any time. There is no waiting for the opening bell.
High liquidity - The Forex market with an average trading volume of over $1.3 trillion per day. It is the most liquid market in the world. It means that a trader can enter or exit the market at will in almost any market condition minimal execution marries or risk and no daily limit.
Low transaction cost - The retail transaction cost (the bid/ask spread) is typically less than 0.1% (10 pips or points) under normal market conditions. At larger dealers, the spread could be smaller.
High liquidity - The Forex market with an average trading volume of over $1.3 trillion per day. It is the most liquid market in the world. It means that a trader can enter or exit the market at will in almost any market condition minimal execution marries or risk and no daily limit.
Low transaction cost - The retail transaction cost (the bid/ask spread) is typically less than 0.1% (10 pips or points) under normal market conditions. At larger dealers, the spread could be smaller.
Structure Of The Forex Market
First what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.In the beginning countries would trade with each other using the barter system. If one nation needed lumber but had cattle, they would trade one product for another. This was pure trading. This type of economy has many limitations, but served mankind well for many centuries. However, nations quickly saw the benefit of having a system of exchange, and while some cultures used pretty rocks, or animal teeth, precious metals quickly became established methods of exchange. God and silver were the most popular. Initially gold and silver coins were used, and in fact the name of the British standard currency, the pound sterling, came from the Hasterling region where gold coins were made, and originally meant coins of the Hasterling’s. Up until World War I most nations had central banks that supported the value of their currencies and most used gold as the standard. Paper money was printed and it legally could be exchanged for gold but this did not often happen. Since it was rarely converted, some banks and some nations believed they no longer needed to keep reserves of gold in their vaults, as the US once did with Fort Knox. Inflation then occurred.Near the end of World War II a conference known as Bretton woods had many nations reach an agreement on a reserve currency system based on the US dollar. The World Bank and other organizations agreed, and a fixed exchange rate system was reached. The value of the dollar was fixed on a certain amount of gold, and other currencies were fixed on value to the dollar. Currency trading after this however has evolved and currencies have grown in value, and gone down in value, leading to fluctuation.Today traders take advantage of the fluctuation in value among currencies through the forex or foreign currency markets. It is quite common to see a trader who suspects that the value of the Euro will go up against the yen or the dollar and follow the old axiom of “buy low and sell high.” On of the ways this is done is through margin trading. With margin trading a trader doesn’t have to have all the money in an account that is being traded. If a trader has 10,000 and works with a one percent margin, he is able to trade $100,000 in currency. This adds great leverage to the trade and makes forex trading very attractive to many who are looking for a large and quick return on their investments. Forex traders are also attracted to the low costs associated with trading since most trades are without commission. The fact that there is a 24 hour trading cycle is also attractive to many. Traders have opportunities for large profit, but they also have risk inherent. An aggressive trader may experience profit and loss swings of up to 30% in a day. This can be 30% to the good, or to the bad, so forex trading requires education and courage as well as capital. However there are no daily limits and no restrictions on trading hours other than the weekend when markets are closed. For this reason there are always opportunities. Money will always be made.Some nations in the past have complained about hedge funds and other large institutions involved in forex trading, saying that they have intentionally devalued their currencies to make quick profits. George Soros, the famous billionaire who is involved in politics, has been accused of this practice by the government of Indonesia. Whether it is true or not, and if true whether it should or should not be done is not for this article. However, when institutions control such large amounts of money, the chance of manipulation does exist. As long as foreign currency is traded, there will be such accusations. However, the forex market remains a way to achieve substantial financial gain.There is a wealth of opportunity in the Forex Market. Millions will be made by millions but of course the contrary is also true unfortunetaly. Always be cautious and do not mortgage the farm...
Forex Trading Currency Online
Things You Should Know About Forex Trading
How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.
Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others.
Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.
Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.
Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.
A few things that separate the top traders from the rest are:
Education : They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.
Forex trading system : Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.
Price behavior : They have incorporated price behavior into their trading systems. They know price action has the last word.
Trading psychology : They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.
Money management : Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.
These are, among others, the most important factors that influence the success rate of Forex traders.
We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results?
It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.
Online Forex Trading :easy-forex
Trading successfully is no easy task, it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process : having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
by. forex-trading-currency
How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.
Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others.
Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.
Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.
Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.
A few things that separate the top traders from the rest are:
Education : They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.
Forex trading system : Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.
Price behavior : They have incorporated price behavior into their trading systems. They know price action has the last word.
Trading psychology : They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.
Money management : Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.
These are, among others, the most important factors that influence the success rate of Forex traders.
We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results?
It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.
Online Forex Trading :easy-forex
Trading successfully is no easy task, it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process : having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
by. forex-trading-currency
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