By Matthew Vint
Because of the nature of Forex trading, many people look at it as a way to make a lot of money fast and in doing so try to find shortcuts that will increase their profits and bypass the normal learning curve. While the intentions are good, the concept just does not work out in the real world or on the trading platform. Forex trading does not ask you a diploma or a resume; it only requires that you be willing to take the discipline to learn a few skills.
The actual daily function of executing trades is very simple. However, it is the reason behind those trades that decides on whether they are profitable or not. Technical analysis is only as good as your ability to read and set up a chart and then hope that the market will continue to follow the pattern so that you can make a profit. But every other technical trader is watching the same thing that you are and so it is very possible the market may decide to change direction just for that reason.
Using fundamental analysis in Forex trading, is much more stealthier way of looking to gain profits in the Forex market. Everyone gets the same news but not everyone interprets it the same way. Language, cultural and political differences all put a different spin on the news that is available. By building a mix of news outlets you begin to find patterns that show you the true nature of the markets feeling and can then use your technical skills to plan entry and exits. This ability to read the news from different sources and summarize it is a good activity for your trading journal.
Trading risks can be mitigated by continually watching for reports of world events as they happen during the trading day. The rapid dissemination of information allows the market to react almost immediately, so if you are not aware of world events you may be left holding losing positions. Fear of loss drives the Forex market more than any emotion and if you can stay ahead of the fear cycle you can prosper. Fear in a trader will cause them to close good positions and reverse them as well as make bad choices based on an irrational belief.
The severe market changes based on the news are evident at least once a week as the non-farm payroll numbers are announced. The release of this single number most often causes a jump of close to 200 pips either up or down within 30 seconds resulting in millions of lost dollars as automatic stops are bypassed due to the rapid move. Natural disasters, speeches by world leaders and civil unrest all play a part in developing a fundamental analysis of the Forex market.
In conclusion, you must believe in the approach that you take to trading and ensure that you have the proper safeguards in place to prevent significant losses. It is also important that you are aware of current news and announcements in order to know when to sit on the sidelines. Fundamental analysis is not straightforward, it takes work and time to develop a feel for the market, but the results are well worth it.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
The actual daily function of executing trades is very simple. However, it is the reason behind those trades that decides on whether they are profitable or not. Technical analysis is only as good as your ability to read and set up a chart and then hope that the market will continue to follow the pattern so that you can make a profit. But every other technical trader is watching the same thing that you are and so it is very possible the market may decide to change direction just for that reason.
Using fundamental analysis in Forex trading, is much more stealthier way of looking to gain profits in the Forex market. Everyone gets the same news but not everyone interprets it the same way. Language, cultural and political differences all put a different spin on the news that is available. By building a mix of news outlets you begin to find patterns that show you the true nature of the markets feeling and can then use your technical skills to plan entry and exits. This ability to read the news from different sources and summarize it is a good activity for your trading journal.
Trading risks can be mitigated by continually watching for reports of world events as they happen during the trading day. The rapid dissemination of information allows the market to react almost immediately, so if you are not aware of world events you may be left holding losing positions. Fear of loss drives the Forex market more than any emotion and if you can stay ahead of the fear cycle you can prosper. Fear in a trader will cause them to close good positions and reverse them as well as make bad choices based on an irrational belief.
The severe market changes based on the news are evident at least once a week as the non-farm payroll numbers are announced. The release of this single number most often causes a jump of close to 200 pips either up or down within 30 seconds resulting in millions of lost dollars as automatic stops are bypassed due to the rapid move. Natural disasters, speeches by world leaders and civil unrest all play a part in developing a fundamental analysis of the Forex market.
In conclusion, you must believe in the approach that you take to trading and ensure that you have the proper safeguards in place to prevent significant losses. It is also important that you are aware of current news and announcements in order to know when to sit on the sidelines. Fundamental analysis is not straightforward, it takes work and time to develop a feel for the market, but the results are well worth it.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
0 comments:
Post a Comment