Success In Forex Trading Markets

Success In Forex Trading Markets

by Eric Long

The more you know about them, the more data you have to analyze to spot the trends, which will increase your chances of success.
The foreign currency market is one of the most exciting attractive and lucrative markets in the world, but it is also extremely fast moving and volatile. While you can make tremendous profits, you can also make substantial losses if you do not have a very clearly defined game plan. At the heart of Forex trading is a wealth of information which has to be not only constantly updated but which also has to be accurate.

The principle behind technical analysis is simply that, while political, economic and social factors do drive the forex market, it is not necessary to study them in depth because history repeats itself and these factors in whatever combination you choose have occurred time and again in the past so their affect can be seen by simply studying the historical pattern of currency movements. Fundamental analysis thus looks at political events and economic data such as inflation, interest rates and trade figures, as well as social data such as employment rates.

Too often you will see sites that are promoting ways in which you can get rich through Forex trading as long as you purchase their book for $100. The prices vary but one thing is certain the beginner must study the market before investing any significant money. Technical analysis holds that prices follow trends and that markets possess clearly identifiable patterns which can be recognized if you know what you are looking for.

Perhaps one area of general agreement however is that analysis of a country's balance of payments is crucial to the success of fundamental analysis. The balance of payments is important because it reflects the flow of currency in and out of a country and a situation in which money is flowing into a country faster than it is flowing out, or vice versa, will clearly affect currency prices. For this reason the very first thing that any novice forex trader needs to do is to sit down, study the foreign exchange markets carefully and learn the ins and outs of trading before putting any money at risk.

Both knowledge and experience play an important role in technical analysis but here it is a case of knowledge and experience of not just the patterns in the market but of working with the barrage of tools which are know available to the technical analyst. In other words an analysis of, for example, the effect that rising or falling interest rates have had on currency prices in the past is used to predict the effect that a rise or fall in rates today will have.

Today's forex traders have the option to abandon fundamental analysis in favour of technical analysis. Perhaps one area of general agreement however is that analysis of a country's balance of payments is crucial to the success of fundamental analysis. Historical data is then used as the basis for predicting movements in the light of current figures. Analyzing just how forex prices will be affected is of course something which is hotly debated by fundamental analysts.

Accordingly, the main tool of the technical analyst is the chart, or more accurately a series of charts, which provides a graphical representation of the market over time. Your broker will make his profit from the 'spread' on each trade, which is the difference between the buying and selling price of a currency pair and is a subject all of its own. Both technical and fundamental analyses are of course not in themselves trading strategies but are the foundation on which you will need to build your trading strategy.

Unfortunately a lot of people starting out in Forex trading have often heard that you can make good money through day trading. Look at the various tools and systems that are available and soon you will discover that you are able to trade on the markets much more easily after just a couple of weeks. So if you do not want to end up in the same situation as many before you, here are some tips in relation to Forex currency trading online that can help you gain more and lose less.

The more you know about them, the more data you have to analyze and spot trends, which will increase your chances of success. Although this is easier said than done, you can't get greedy or nervous and ignore what it tells you. Simple Forex trading systems work much better than the more complicated types. As like many before you, when you first start trading on the Forex market you will soon realize that a lot of the traders lose money rather than gain. If you include these few tips to any plan you are devising for your Forex currency online trading then you should soon be on your way to making some decent money.

Learn Forex Trading - This Equation Could Make You Rich

Learn Forex Trading - This Equation Could Make You Rich

by kelly price

If you want to learn forex trading, then you need to understand the equation enclosed (most traders don't) if you do and can see its significance, then you can enjoy long term currency trading success so here it is:

Fundamentals + Investor Perception = Price

Now that simple! But consider its significance and understand that most traders don't, because they base their forex trading strategies on the following forex myths:

- Following the breaking news stories is a great way to make money

- Day trading limits risk and can be rewarding. - Forex prices can be predicted.

- Markets move to a scientific theory.

Believe any of the above and you will lose and lose quickly.

Let's take a look at the equation in more detail.

We all know the supply and demand situation affects the price but it's not the fundamentals that are important it is the way humans perceive them.

We all have the same facts to look at but we all decide what they mean in our own way, with the emotions of greed and fear controlling the bulk of traders.

Try and trade news stories and you are simply seeing a story nothing more and if traders got rich trading the news there would be a lot more traders who make money.

Day trading works of course it doesn't - the time span is to short how can you possibly predict what millions of traders will do in a few hours? - You can't.

Forex prices cant be predicted either, as that's just another word for hoping or guessing and you wont make any money doing that and this is linked to the fact there is no scientific theory of market movement. If there were, we would all know the price in advance and there would be no market.

What you really need to understand regarding the above equation is:

Forex trading is chaotic but you can win if you trade the odds.

It's a fact that traders throughout history push prices too far - this is trader psychology at work. Short term price spikes never last for long and their easy to see on a forex chart and their tradable for profit for savvy traders who can spot them.

Certain chart patterns reflect human psychology, if you can learn to spot them and trade them you can trade the odds and win.

You simply react to the reality of price change and go with the trends - no hoping or guessing just trading the reality of price.

If you use charts you can you see the fundamentals as well as the trader psychology.

All a forex chartist does is assume that all fundamentals are immediately reflected in price action and in today's world of instant communications that's truer than ever before - but forex charts give you something more.

You get to see how the participants perceive the fundamentals and its humans that determine the price.

If you have read this article and understood it you will see the common myths that most traders fall for and lose and a better way to win.

Think about the above equation and what we have said here and you will have a valuable piece of forex education which can set you on the road to learning forex trading the right way and help you enjoy long term currency trading success.