The foreign exchange market, also known as forex or simply ‘’FX’’, is the largest investment market in the world with more than $5.2 Trillion every day.
While the forex market was quite inaccessible to outsiders in the past, being reserved solely to big financial institutions, hedge funds and banks, the advent of the internet has brought along with it tons of everyday people who want to try their luck. If you want to be a retail trader then have a read of this article and get back to me with any questions you might have.
Forex trading can be a highly lucrative career path and is also a way to make money quickly, however t it can be difficult to find your way around at first. There’s a relatively steep learning curve involved as well as a lot of decisions that carry a lot of weight.
For instance, you have to decide on a reliable broker, which currency pairs you want to trade, and how much you want to deposit. Forex Education is a crucial factor and you need to find a mentor that will help and guide you through the early days of this exciting new journey you can embark on.
Defining a Basic Forex Trading Strategy
Technical analysis and fundamental analysis are two of the most used strategies in the forex market. Technical analysis is by far the most common strategy used by individual forex traders, which we’ll explain in further detail below. Humans are creatures of habit and with this, we can predict in a way the future by observing the past.
Fundamental analysis in the forex market is complex, and is often used only to predict long-term trends; however, some traders do trade short term strictly on news releases. There are many fundamental indicators of currency values released at many different times such as:
Purchasing Managers Index (PMI)
Consumer Price Index (CPI)
Technical analysts analyze price patterns and trends, similar to their counterparts in the equity markets. The only key difference between technical analysis in forex and technical analysis in equities is the timeframe, as forex markets are open 24 hours a day. As a result, some forms of technical analysis that factor in time must be modified to factor in the 24-hour forex market. These are some of the most common forms of technical analysis used in forex:
Chart Patterns and Formation
The Elliott Waves
Many technical analysts combine these studies to make more accurate predictions. (i.e., the common practice of combining the Fibonacci studies with Elliott Waves.) Others create trading plans to repeatedly locate similar buying and selling conditions and most importantly that fit around their current schedule or lifestyle.
Finding Your Forex Trading Strategy
Most successful traders develop a strategy and perfect it over time. Some focus on one particular pattern or just use price action, while others use confluence analysis to determine their trades. Using a combination of both fundamental and technical analysis in order to make long-term projections and determine entry and exit points is crucial to being successful in forex trading. That said, it is the individual trader who needs to decide what works best for him or her (most often through trial and error) in the end.
Forex Trading Considerations to Remember
Open a demo account and demo trade until you can make a consistent profit. Many people jump into the forex market and quickly lose a lot of money due to taking on too much leverage. It is important to take your time and learn to trade properly before committing capital. Once you have gone through the training and worked with your mentor open a live account and start trading.
Trade without emotion. Don’t keep “mental” stop-loss points if you don’t have the ability to execute them on time. Always set your stop-loss and take-profit points to execute automatically, and don’t change them unless absolutely necessary.
The trend can be your friend. If you go against the trend, make sure you have a good reason. That’s because you have a higher chance of success in trading with the trend because the forex market tends to move in that direction than the other.
Learn Technical Analysis
Learn to transform technical data and pricing trends into actionable trading plans with myself and the iMarketsLive Education platform. You’ll learn basic and advanced technical analysis, and the technical indicators you need to identify and capitalize on price trends of any currency or instrument. Join a network of nearly 100 000 members all learning how to trade forex and change their lives for the better. With dozens of weekly webinars, signal groups and live trading training you can really not afford to miss you on joining the fastest growing forex communities on the planet.
The Bottom Line
The forex market is the largest market in the world, and individuals are becoming increasingly interested in learning to trade in FX and create an extra income or become full-time traders. If you want to join me and my team on this forex trading journey then email me on [email protected] and let’s get the ball rolling to collecting those pips (money)