Who plays the Forex Market?

March 25, 2013 by  
Filed under Featured, Forex Tips

Of all the different trading markets available in the world, there are some which are highly specialised and only attract the real niche experts, and others which attract a broad range from occasional traders to people who do it for a living. Of these two categories, the Forex market falls very much into the latter, and there are a number of ways that you can get a good grounding in the ways of the market without risking any of your own money. There is a dizzying amount of money spent on the market in any given day – upwards of three trillion dollars – and money traded on the market makes a big difference in the world of finance.

While its seriousness as a market ensures that the more experienced traders will keep a close eye on the Forex, it is also seen as an accessible way to get involved in trading for people who have never tried, or have tried but found other markets to be way too complicated. With the Forex, everyone knows what they are trading – “Dollars” and “Euros” are not exactly obscure brand names – and this allows them to understand it more before they get deeply involved.

The truth is that anyone can play the Forex market, although it goes without saying that the more skilled and more experienced you are as a trader, the more money you can stand to make. It is certainly a trading market that is easier to understand than many, and this has its blessings and its drawbacks.

The Data of the Forex Market

March 25, 2013 by  
Filed under Forex Tips

Being able to read the comprehensive and constantly-updating information that flashes across the screen in any investment banking firm or hedge fund is tantamount to forgetting the English language and learning to speak it all over again, from scratch. There is so much complicated information on the screen at any given time that it can be rather daunting for a novice or even for someone who feels that they know quite a lot about private finance.

Learning to decipher the data in the forms in which it comes to you can be a test for anyone. It is important to find, first of all, something that makes sense to you in its present form. From that it is often possible to extrapolate a little bit more information. Before really throwing yourself into Forex trading though, it is hugely important to read everything you can find on all the different ways of collating data, how to arrange the information and what parts of that information to set the most store by.

Some charts will tell you how the market has been changing over the last day, and sometimes it will also include information on how the price has trended over a period of five, ten, even twenty days. There is data that allows you to predict when a market will stabilise or fall, or even rise, and how to arrange your investments in reference to that information. Knowing how to read all this information won’t make you a billionaire, but it will help you to get a head start.

Fundamental Analysis of the Forex Market

March 23, 2013 by  
Filed under Trading in the Market

It is broadly accepted that there are two ways to analyze the Forex market. These are described as “fundamental” and “technical” analysis. Which of these methods works at which time? To help understand how and why, this article will look at fundamental analysis. This is a style of analysis that looks at political and economic conditions which affect exchange rates. Most commonly, these factors include employment rates and economic policies of a governing party. It therefore stands to reason that a general election in a country will have some bearing on the Forex rate for that country’s currency.

Fundamental analysis, as the name suggests, gives a broad overview of the way currencies move, and enables an understanding of where a certain currency is going. The role of fundamental analysis is to strengthen your strategy by giving it an underpinning of sound, concrete factors which have been proven, time and again, to govern how a currency will perform.

To understand the present behavior and confidently predict the future behavior of a currency, it is worth knowing things like interest rates (considered to be an indicator of continuing strength in a currency) and economic factors such as GDP and foreign investment. If a company invests in factories, offices and labor in a foreign country, it brings wealth and potential to that country, and is likely to give its currency a boost. Knowing that a country has foreign investment in the pipeline can enable confident prediction of its currency strengthening and remaining strong.

Things to keep in mind for Forex traders

March 2, 2013 by  
Filed under Forex Tips

There is plenty of risk involved in trading on just about any market. Hostile conditions can leave you high and dry if you do not have the knowledge required to get out of a risky position at the right time. On the other hand, over-reaction to a temporary situation can put you in an equally tough situation, so it is worth keeping some things in mind

  • Firstly, remember that you are trading with borrowed money. Before you make your first real trades, open a demo account and use that to test your instincts. Once you are making profits consistently you can switch to trading real money – and will be much less likely to lose it. If you have encouraging early results, do not be tempted to jump right in – this is not the time for high risks.
  • Be consistent. It is easy to get carried away if you feel that a position is destined to bring you a profit. You may think inwardly that you have a stop-loss point of no return, but when the currency hits that price you flinch and convince yourself that it is coming back up. You might as well not have set the limit in the first place, then. Have realistic targets and stick to them.
  • Choose your broker wisely. There are some Forex brokers who use legally or morally questionable tactics to guarantee a profit and there is no-one they will not sell out – yourself included. Ask around for tips, and follow the advice that keeps coming up.