There are a few things to be done if you are to be a successful forex trader: Obtaining the appropriate info; and then taking the right action as a result of the info. Nothing more. In starting forex trading, you just can’t underestimate the power of this.
I guess these two steps apply to pretty much everything we see in our lives. Look at the subject of war. Deciding to attack another country, even in peaceful times, might be justifiable if there is intelligence that shows that the other country is planning to attack. It’s the same with investments and, consequently, Forex trading. That’s why there are Insider Trading laws, to prevent people from using it overly to their advantage.
Since the information is quite clearly a key factor, the million dollar question is of course how do we go about this info? Well, there are various types of information to take into account. First, you have data. We’re talking about hard figures here…in the case of the Forex market, exchange rates right now, what they were a certain period ago. We would also consider other numbers to help us work out what direction a currency is heading…numbers like Central Bank Interest rates, Consumer Spending, Employment figures etc.
The currency prices - both current and historical - you can get from your Trading Software. The other bits can be gotten from a various news sources. Bloomberg news is a good example. Also, you will find that most Brokers provide some sort of news feed that will supply this kind of information as well. The thing to note here is that most of this is data. By it’s nature, it is not subjective. A number is a number, irrespective of where you get it from.
With the data out of the way, you move to the movements that the relevant currency pairs will make and why.. This analysis is the major part of a forex trade. Some Traders prefer to do fundamental analysis, while others will look to the charts for guidance. I try not to get involved in the arguments about this. I prefer to do both of the above. I listen to the news and check how the Economy is doing etc. Then I go to the charts and finish off my analysis.
It might not be a bad idea to subscribe to a paid service for short while. it wasn’t too expensive, and it was a good way to learn a bit more from professionals who charge for what they consider to be good information. I learnt from those initial months and began to make decisions myself.
Consideration should also be given to how other markets are responding to events. Are stocks going higher or lower? What about oil and gold? How do all of these affect the pairs I want to trade? There’s also the Volatility index, which helps to tell how afraid investors are about the current conditions.
Using all of this information properly should me your trading decisions more profitable.
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