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New to Forex

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  • New to Forex

    Description of the Market

    The currency market is the largest market in the world, with a daily volume close to $5.1 trillion per day in April 2016. It is the only financial market that gives investors access to carry out transactions 24 hours a day, as there is always a financial center open at any time. The Australian and Asian banks open first, followed by the European and American ones. This special feature allows investors to always find a speculation strategy with which to make money.

    Participants in the Forex Market

    The currency market is an over-the-counter (OTC) market, which means that there is no central market and clearinghouse where orders are negotiated.

    Brokers all around the world are connected 24 hours a day by telephone, computer and fax, creating a market with excellent liquidity, providing investors with the possibility of liquidating their positions at any point in the day.
    Technology has broken down the barriers that existed between the end users of currency purchase/sale services and the interbank market, becoming the investor's greatest ally thanks to its power of range, which allows anyone wishing to participate, to do so.

    Forex Market Analysis

    As in the stock markets, we have those who favor basing trading decisions on technical analysis and those on fundamental analysis. Both can be equally as useful and should be taken into account, especially if the particulars of the currency markets are recognized. The historical and statistical basis in techinical analysis is most often the study of choice for those involved in more short-term positions. On the other hand, fundamental analysis is favored by those more concerned about the long-term and true valuation of a currency.

    Technical Analysis

    Technical Analysis looks at historic price actions to forecast future price movements. Analysts look for key support and resistance levels to see where the market believes a currency pair is cheap or overpriced. Statistics also play a huge role through the use of technical studies such as moving averages, bollinger bands, and the relative strength index. Charts are very important for techinical analysts as they try to detect emerging trends and patterns.
    Technical Analysis is perhaps most useful in the forex market due to its strong tends. Additionally, the marketīs liquidity and lack of gapping creates more data points on the charts and a fuller picture of the market.

    Fundamental Analysis

    Fundamental analysis takes into account underlying factors that would influence the price of a currency. Most fundamental analysis in currencies involves watching news events closely and gaging market reactions. Many fundamental analysts are long-term traders, understanding the strong tendencies in the forex market. They watch the release of economic reports such as the Consumer Price Index, Gross Domestic Product, and the Employment Report. Also, decisions from policy makers such as interest rate hikes are important. For instance, a hike in interest rates are likely to be favorable for that particular country as it would create demand for the currency.

    Maximize profits

    Always remember to have an already fixed plan at the time of trading. Define the currency contract you are going to trade, the amount in lots you are going to buy or sell, the price and the limit and stop you will impose upon your trades. Analyze charts. Test your abilities bearing in mind all this information. Access free charts by clicking here.

    The use of an adequate strategy will maximize your profits; bear in mind that you will not make a profit in all your trades but the important thing is that you make a profit in most of them. Use limit and stops in your trades, be cautious, let your profits flow and reduce your losses. Be cautious with your level of exposure on the forex market.

    Do not operate against the trend, which is a common feature among some traders.
    Remember that there are two forms of Trading; see the technical analysis and fundamental analysis sections.
    Make full use of your tools; at AFM you will find the necessary tools to trade in the forex market: news, charts, economic analysis and the latest market comments.

    Manage your risk using stop and limit orders. Make a summary of all your trades and observe which has been the most successful strategy you have applied to improve your performance.

    Collect inspiration from the best traders

    We are always looking for success in different areas of life and we often define it with the example of very successful people in the area that we want to be successful.

    In forex, it happens in the same way. Throughout the history of the currency market we will find that certain people managed to amass huge sums of money and these people become our benchmarks of success.

    Study, see how they have behaved in the market, read their success stories, collect inspiration from them.

    You can read: These are the 10 best and successful forex traders in the world

    You are free to add recommendations and tips to new traders. Success!
    Last edited by mundus; 11-21-2016, 07:26 PM.

  • #2
    Very informative thread this is! No doubt, technical and fundamental both are important for doing Forex trading! But if you are a new Forex trader never start your learning process with fundamental I mean news trading! You should start your learning through technical analysis! Build your trading skill gradually, donít be rush! In addition, go for live trading when you are sure about your trading skill!