Psychology Matters in Forex Trading

As a Forex Trader, you need to have many qualities, if you want to be a successful trader in the FX market. It doesn’t matter what is your capital, what is your trading strategy, what is your family or educational background, the only thing matters is your attitude – your psychology. Being a expert Forex trader is not easy; it’s very hectic field and needs a lot of patience. Here is a detailed list of some important psychological tips that will help you a lot in your Forex trading career.

Forex Trading Psychology  (Image Reference)

• Bear one thing in your mind that you cannot become a millionaire overnight in the Forex trading. If you think that forex is an easy job to quickly double your money, then you are absolutely wrong. Forex market is the most unpredictable market and it has equal chances of success and failure. So be sure that you need time to start earning handsome profit, probably 6 months to a year depending on your learning skills.
•  Forex trading is the game of patience and calmness. If you have low tolerance and you cannot wait for the right time, forex is not the field for you. In the real FX market, you will have to wait for days, weeks or even months to do a single trade. If you are stepping in, be prepared to remain patient all the times and avoid hassle.
• You must learn from your mistakes, flaws and losses. Do not lose your heart if you initially face heavy financial losses, rather try to learn from the situations and avoid repeating the same mistakes again and again.
• Develop a habit of learning. Keep learning from co-traders, try to find out new strategies, build your own forex indicators, read news, talk with expert traders, keep using various software and so on. Remember, the more you learn and absorb, more your profits will be.

Remember you cannot win the game without knowing the rules. Happy trading.

Forex Fundamental Analysis

Forex Fundamental Analysis is the analysis of the FX market on a macro level. The analysis is carried out to predict the future price movements of the currency of any particular country using certain tools like economic growth, GDP, interest rate, BOP, employment rate, inflation rate and others. Changes in these factors impact the currency of that country either positively or negatively, that means the currency will either depreciate or appreciate. The Forex  Fundamental Analysis is not easy to conduct like a technical analysis as it needs a lot of expertise and experience. Most Forex traders rely only on technical analysis. But fundamental analysis also can be used to identify riskiness of a particular investment.  

Forex Fundamental Analysis (Image Reference)

In Forex Fundamental Analysis, the analyst need to consider a lot of factors and has to use many tools to conduct the analysis. Political conditions of the country, economical and cultural conditions, technological advancements, foreign reserves, statements of important political figures and many other such type of factors need to be evaluated. Once the evaluation has been done, the analyst has to develop an analysis for forecasting the currency appreciation or depreciation in the near future.

Tools or Signals Used in a Forex Fundamental Analysis

• Past Trends
• Updated news and announcements regarding the currency.
• Statements of important political and bureaucrat figures

Normally peers and co-traders help a lot in sharing latest world news. It is not necessary that you must carry out a complete fundamental analysis considering all the tools and indicators; rather you can do it on daily basis just by keeping an eye on the latest news and announcements. For instance, if there is political instability in a country then of course, the currency of that country will depreciate. An expert Forex trader will have an eye on the news about the political instability of that country and will act accordingly by getting rid of the currencies that might depreciate. On the other hand, if a trader is unaware about latest news may face heavy losses. Hence, it’s very important to stay updated and keep on monitoring the world around you.

It is highly recommended that you, as a trader,  must use both technical and fundamental analysis for better and enhanced grip on the future price movements.

Forex Technical Analysis

Forex traders are in a continuous process of analyzing the Forex market. They never sit idle and keep on doing something. Forex Technical Analysis is the name of one such analysis that is carried out by almost every trader whether on a small scale or on a very big scale. In a Forex Technical Analysis, the future price movements of various currencies and currency pairs are forecasted with the help of certain tools and techniques. Predicting the future currency movements is something which is very common in the FX market. Almost all the online forex trading platforms come pre-installed with such type of software that will provide assistance to the trader in his/her predictions.

Forex Technical Analysis (Image Reference)

All such types of analysis help Forex traders to predict future currency prices with the help of software, tools, techniques. Forex traders use forex indicators, forex charts, historical data, statistical data and all types of other sources that are available online. There is no fixed set of rules and tools that are to be used for technical analysis, rather there are many tools (either built in or purchased ones) which can be used for the analysis. As the forex trading is becoming easier and more simplified, now Forex technical analysis is provided by the trading software delivered by almost all online platforms. Traders can see a complete technical analysis all the times when they are logged into their online Forex platform. Online Forex trading software are installed with many other Forex tools, technical analysis tools, indicators, charts, expert advisors and so on.

The purpose of all the technical analysis tools is to simply provide the traders the ease to decide where to invest for high returns. Some best forex technical analysis tools include:

 Moving Average Convergence Divergence (MACD)

• On balance volume forecasts
• Bollinger Bands
•  Relative strength index (RSI)
• Stochastic
• Waves
• Trends
•  DMI
• Number theory
• Gaps

Always base your trading decisions on Forex Technical analysis to have a safe investment in FX Market.

Currency Strength in Forex Trading

Currency strength represents the strength or the value of a currency. Different currencies have different strengths and the currency strengths keeps on changing time to time with the economical changes in the country. In the FX market, traders love to have strong currencies with them all the time. US dollar is the strongest of all currencies. US dollar has been the center of the FX market as well as the center of the business world. So ultimately, all the traders love to trade in currency pairs having US dollar either as base or quote currency. This is the reason that more than 85% of the trades in the FX market contain US dollar.

Forex Currency Strength (Image Reference)

In the FX market, traders usually keeps on monitoring the strengths and weaknesses of various currencies and then trade accordingly. Traders try to sell out weak currencies and keep with strong currencies all the times, as weak currencies carry a lot of risk. Currency strength is used as an important indicator by the Forex traders to choose which currencies to hold and which are not. There are many companies that offer currency strength measuring indicators. Many online trading platforms already have built in currency strength monitors which continuously keep on monitoring the market. The currencies are measured from many prospective by a currency strength indicator including: purchasing power, interest rates offered, future price movements, the strength of currency with respect to other currencies (normally US dollar) and others.

As US dollar is considered as the center of the FX market, currency strength indicators monitor the strength of currencies with reference to US dollar or in some cases with other strong currencies like Euro. The idea, in any case, is to get hands on the strongest currencies to multiply profits.

Advantages of Forex Trading

Forex Market is the fastest expanding market in the entire world. The number of registered Forex traders is multiplying each day and many new traders and investors are entering the FX market due to its numerous advantages. If you are also thinking to be a part of the FX market, then keep reading as you will come to know about many advantages and benefits of the FX trading at the end. Here are some major advantages of the Forex market/trading.

Forex Trading (Image Reference)

•  Forex market is the most liquid market of the world; no other market can be compared with the FX market in terms of liquidity. This is because pure currencies are traded in the Forex market and US dollar is the major currency of the market. Almost over 85% of trades carried out in the market include USD ($) in any form, which itself is very liquid. So highest liquidity is the basic advantage that Forex market has over other markets.
• Forex market remains open 24 hours a day, 5 days a week. So traders don’t have to sit and wait for the market to open, rather they can start trading at any time of the day. The FX market has 3 major key centers which have different opening and closing timings making a 24 hour platform for the entire trading network around the globe.
• It is the most leveraged market in the world where trader has to invest 1% of the total capital while the remaining 99% is invested by the broker. This particular advantage is not available in any other market, business or investment opportunity.
• Forex traders have the ease to trade electronically from anywhere. All the Forex trading activities are carried out electronically over the internet. You don’t need to visit the market physically to buy or sell currency pairs. This feature of trading electronically over the internet has added millions of part-time trades, which is a positive sign for the market.
• The capital requirement for the Forex traders is very flexible and is pretty low. You can start your FX trading career with $200. No other business offers such low investment opportunities.