Learn Forex Trading
With Our Comprehensive Forex Beginners Course
Welcome to our forex trading course. If you feel like you’re a penguin in the desert when reading about forex trading, don’t worry, our forex course is here to guide you and help you through your journey in the kingdom of money .
Our forex education aims to introduce the trader to the basics of how to trade forex. Nobody wants to have a brutal freshman experience as he takes his baby steps to a new activity. By enlightening the new trader as to what he shouldn’t do in the markets, we aim to minimize the birth pains of his budding career. The new trader can expect to find a no-nonsense discussion of the various pitfalls and dangers associated with currency trading in these pages, but he will also find a good deal of advice on what he should do: study, be patient, be humble, and don’t gamble.
Sound interesting? Read on then, here’s our first lesson.
Introduction to the Forex Market
Many of us have been fascinated by the shiny, colorful world of currencies as children, and even those of us who have little interest in the forex market have engaged in some form of currency trading while traveling outside their homeland. Read More
Forex Quiz - Test Your Forex Trading Skills!
This fun quiz consists of 35 questions and cover many different topics from technical to fundamental analysis of the Forex markets. It is totally free, no registration required and you will both have fun and also find out about your. Read More
Currency Pairs - Understanding and Reading Forex Quotes
Our first grade in forex literacy is for understanding how to read the price quote. In forex, currencies are always quoted in pairs. In other words, it’s only possible to value a currency in terms of another one. Read More
Forex Pips and Lots
A pip is the smallest amount of movement a price quote can make. In other words, each tick of the price quote is a pip. When EUR/USD moves from 1.2786 to 1.2787, for example, it has moved by one pip. Read More
Margin Trading and Leverage Accounts
It’s very important that the trader gain a good grasp of these two concepts before engaging in any deals, because leverage and margin determine the lifespan of any trading account in a far more decisive manner than either technical or. Read More
Major Currencies and Currency Types
There are a lot of nations in the world and consequently a large number of currencies to choose from when trading. The currencies of Brazil, Russia, China, the Eurozone, Turkey, Japan, South Africa and Canada are popular with large and. Read More
Forex Analysis - Analyzing the Forex Market
So we know what the forex market is, and we know what we want to do with it: We want to make money. How do we make money? That’s where we must understand forex analysis. See also forex technical analysis. Read More
Forex Fundamental Analysis
As we mentioned before, prices do not cause prices. The reasons that lie behind price movements in the forex market are the subject of fundamental analysis, and those familiar with trading stocks should have little trouble in becoming familiar with fundamental. Read More
Forex Technical Analysis
The beginnings of technical analysis is usually dated to the Dow theory, and to the early part of the 20th century. Over the years, many contributors have created indicators, oscillators and moving averages of all sorts to increase the arsenal. Read More
Summary - Forex Analysis
Needless to say, any method that works is a good method. Conversely, any trading method that fails — however convincing the arguments behind it — is useless. Read More
Trading Styles
What is a trading style? It’s simply what a trader or speculator enjoys or feels most comfortable doing while interacting with the market. They can be valid for both long and short term trading, and for different styles different indicators. Read More
Forex Day Trading
Forex day trading is the style of the short-term speculator. The reasoning behind a day trading style, is that there are times when exceptionally fast market developments allow exceptional profits in a very short time. Read More
Forex Swing Trading
Forex swing trading is a form of range trading. The swing trader attempts to capitalize on periods of market indecision, and aims to make use of support and resistance lines, channels and price patterns such as tops and bottoms in. Read More
Forex Scalping
Forex scalping aims to make use of small price movements and the bid-ask spread in order to turn a quick profit in a short time. Although each profit is naturally small, significant sums may be gathered by persistent trading. Read More
Conclusion - Which Style Should You Choose?
None of these trading styles offer an unblocked path to success, or a sure way to doom for the trader; the successful trader can choose any method he feels comfortable with. Read More
Technical Analysis
In a previous chapter, we discussed what technical analysis is. In this section, we’ll take a look at the various indicators and patterns that are used in technical analysis. Read More
Resistance and Support
Resistance and support lines are price levels which temporarily halt or reverse the continuous movement of the trend. When the trend is bearish, support lines are created where sellers are temporarily (or sometimes permanently) exhausted and cannot press the quote. Read More
Price Action: Chart Patterns and Price Formation
As we noted previously, technical analysis concerns itself with the patterns created by the price quote changing throughout the day and beyond. Through the last century, studies of stock prices have supplied traders with valuable tools for evaluating those price patterns. Read More
Technical Indicators
Technical indicators are utilized by traders in the same way that price patterns are. In the case of indicators the purpose is to give the chaotic jumble of prices and quotes some resemblance of order through the employment of simple. Read More
Fundamental Analysis
Fundamental analysis concerns itself with the causes of price movements. It doesn't attempt to predict future price movements per se, but because economic events move far slower than market developments, it's usually the case that a phenomenon established by fundamental. Read More
Gross Domestic Product (GDP)
Gross domestic product (GDP) is a measure of all goods and services produced inside a country's borders. As such, it doesn't include imports, even though imports can add to job creation and prosperity in an economy. Read More
Producer Price Index (PPI)
We mentioned in the previous section that we’d be discussing inflation, and it’s time to look at one of the two major indicators of inflation that the markets tend to watch at all times. Read More
Consumer Price Index (CPI)
The second type of inflation indicator, the Consumer Price Index (CPI), has far greater bearing on the choices of policy makers (such as the US Federal Reserve), and the market in general attaches to it a far greater degree of. Read More
Commitment of Traders - the COT Reports
The commitment of traders report is a little different from the previous indicators. It doesn’t measure any economic indicator, but merely states the holdings of commercial and speculative participants in various futures markets which are mostly concentrated in New York. Read More
Summary - Fundamental Analysis
As we noted before, fundamental analysis offers the best guidance for determining price trends. To give a simple example, in a stable economic environment, with good economic growth, and healthy employment statistics, central banks are almost certain to respond to. Read More
Trading Psychology
Human beings are emotional creatures. We love, we hate, we adore, worship and despise, we can be enthusiastic, and we can be cautious. The canvass of our lives is colored by the palette of emotions, and indeed it's impossible to. Read More
Overleveraging - the Risks of Forex Leverage
We have already discussed what leverage is, and what it offers to the trader. Let us here take a look at the impact overleveraging can have on trader psychology. Read More
Undercapitalization
Undercapitalization is closely related to leverage, since, contrary to what many people believe, higher leverage actually increases risk-capital requirements. While the broker allows the client to control higher amounts through less initial capital through high leverage, because price swings are. Read More
Money Management
Money management is about the proper application of the points we discussed: Capitalize the account sufficiently, do not overleverage, be disciplined about profit taking, and avoiding losses. There's nothing that difficult about doing this. Read More
How to Become Successful in Trading Forex?
You've read through all (or most of) the articles, have gone through all the warnings and precautions about unrealistic expectations, reckless and risky practices, and compulsive trading, and what not, and you are still interested in forex? You're not intimidated. Read More
Getting Started - Choose a Forex Broker and the Right Kind of Account
In the past, currencies were traded on the phone, and banks prefer audio contact between counter parties as a means of building trust even today, but the individual trader will have all of his needs satisfied simply by opening an. Read More
Learn Forex Trading
Learn Forex Trading with easy to Understand Software that allows you to make 20 pips a day with accurate Trade Entry Exits.
No Experience is Required. We take you from Beginner to Intermediate level.
Cross Currency Analysis - Learn why this is important in Forex Trading and Understand what the Forex market is doing in a split second.
Understand Trading Psychology Money Management techniques.
Learn the same Simple Forex Strategies used by big banks to make Millions of Dollars.
Face to Face Forex Training with Ex CitiBank Trader with 31 years experience.
Small Group Training - Experienced Trading Mentor (Andy Shearman) trains small groups of no more than 10.
These reasons make this the best forex trading course - you'll get anywhere.
Learn Forex Trading
Learn Forex (Foreign Currency) Trading ? Why should you learn forex. I myself make a lot of money from forex. Forex is the largest money market in the world. There is always an opportunity for you to make money . No matter how hard the competition is. The part I love most is you can earn unlimited profit in forex.
LearnForexPro is founded by a young businessman at his early 30 years old who has made hundred thousand of USD. Not bad for a start, isnt it. Do not believe it. Good. Indeed we should not easily believe all the things you find on internet and may have to prove it yourself.
Therefore, as a sense of gratitude LearnForexPro is dedicated to teach and as a step by step guide of how to make money in forex, how forex (foreign exchange) online business can change your life, and at the same time help you to achieve financial freedom .
Our target is making you able to trade forex like a pro. First thing to do is read our forex trading basic, tutorial, and guide. Understand it. Use our trading strategy and system (or you can use your own), get used to trade forex, and start making money.
%img src="bullet. gif> In forex trading, you decide when you want to work, how long you want to work, and how much money you want to make (You are the Boss) Forex trading requires limited equity and the yield could be unlimited
You can make money anywhere (as long as you are connected to internet) and anytime (forex market opens 24 hours a day, 5 days a week). You can maximize your profit and limit your loss . You will have a big probability to become financially freedom by trading forex. All you need to do is read this website for forex tutorial and guide, find your own profitable trading system (or use ours) and repeat making profit by your own trading system.
(I found a successful forex trader whose learned forex business by accident, recently he made a lot of money by trading forex, about tens of thousand dollars a month. and people starting to beg him to manage their money). And this could happen to you. Start learning forex and make money now !
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A Personal Computer (and PDA, optional and preferable)
Stable and high speed internet connection
Limited equity (for example $1000)
Reliable, reputable and trusted online forex broker
You dont need an office, otherwise you can start your business from home or anywhere else. Even when you are travelling, you still can make money. As simple as that.
%img src="bullet. gif>
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.
The average daily trade in the global forex markets currently exceeds US$ 2 trillion. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks
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The answer is Currency . Currencies are always traded in pairs, such as EUR/USD, GBP/USD, etc. Why. Because when you trade forex, you are exchanging 1 currency to another currency simultaneously (buying 1 currency and selling the other at the same instance). You will gain from differences of traded currency price rates.
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Forex can be traded 24 hours a day and 5 days a week. The main trading centers are in London, New York, Tokyo, and Singapore, but banks throughout the world participate. The biggest foreign exchange trading centre is London, followed by New York and Tokyo. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the US session and then back to the Asian session, excluding weekends
The following approximate market schedule is based on New York local time: japan forex markets open at 19:00 followed by singapore and hong kong that open at 21:00. European markets open in frankfurt at 2:00, while london opens at 3:00. New york forex markets open at 8:00. European markets close at 12:00 and australian markets start again at 18:00.
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Majors are the most liquid and widely traded currency pairs in the world. Trades involving majors make up about 90% of total Forex trading. The Majors are: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD and USD/CAD .
Learn Forex Trading
Welcome to the OFXT Dojo where you can learn the art of currency trading! Whether you are new to forex, have some experience, or if you are just looking for advanced strategy ideas we have what you are looking for.
You have to believe in yourself - Sun Tzu
White Belt
What is Forex?
What is Forex? Forex stands for the foreign exchange market. This is also referred to as the FX, Spot FX or Currency market. All of these names are just several ways of describing. Read More »
Why Trade Forex?
Enormous Volume As was mentioned earlier on, the forex market dwarfs all stock markets of the world in volume. It trades about $4 trillion EACH DAY. To put this in perspective. Read More »
Introduction to Currency Pairs
Next, let’s go over the most commonly traded currency pairs. There are three groups: the majors, the crosses and the exotics:Major Currency PairsThe “majors” are those currencies. Read More »
Forex Spreads
What is a Spread? The spread represents the difference between the amount brokers will accept to sell a currency for (ask) and the amount that they will pay for a currency (bid). Read More »
Forex Trading Costs
Typically, while trading currencies on the forex market, the investor does not have to worry about costs stemming from trading commissions. That having been said. Read More »
Forex Order Types
There are a number of different ways to buy and sell on the forex market. Below are the most common order types in the currency marketMarket Order An order place by the trader. Read More »
Trading on Margin
What is Margin? Margin investing is a borrowing method by which a forex investor can trade currencies at higher volume than he would be able to on his own. The intuition. Read More »
Forex Micro Accounts
Forex Micro AccountsSome forex brokers are now offering Forex micro accounts, which allow traders to trade in much smaller increments. A micro lot is 1,000 units of the base currency. Read More »
Forex Micro Lots
Forex Micro Lot Overview Forex micro lots are used when trading currencies and are equivalent to 1,000 units of the base currency. They allow traders more flexibility when trading. Read More »
Forex Trading Compared to Stock Trading
Understanding Forex VS StocksThere are advantages and disadvantages to both markets. That being said, the forex market offers traders a number of opportunities and advantages that. Read More »
Forex VS Futures
Forex trading is now a popular alternative to trading in the stock market or futures market. Markets can be very volatile, you may have seen just how volatile by the. Read More »
Trade Rollover
The forex market is active 24 hour a day which makes for some unique market dynamics, like rollover. Why Rollover ExistsTrade rollover occurs when a broker swaps a trader's. Read More »
Currency Exchange
Exchanging currencies has been around for thousands of years. Today however, one can exchange currencies for the purpose of trading, travel, international purchases of moving internationally. Read More »
Yellow Belt
Fundamentals of fundamental analysis. Already know what a pip is, but don’t quite understand how non-farm payrolls impacts the forex market? Begin here and we will show you how economics and fundamentals drive the currency market forward.
Most Active Trading Times in Forex
When is the Forex Market Open? Though the forex market is open 24 hours a day, there are specific times when the market is faster moving, and it’s easier to make money. There. Read More »
Fundamental Analysis
Fundamental Analysis PrimerFundamental analysis serves as a basic means to determine the future of a particular investment. It is based on using a variety of economic and political. Read More »
Forex Market Movers
Interest Rates BasicsUnlike most markets, the forex market is moved most notably by macroeconomic and geopolitical events. The forex market is so huge that events in. Read More »
Most Watched Economic Releases In the Forex Market
The most popular economic indicators in the forex market have the ability to cause swings of several hundred pips in either direction if they come out at numbers that are different. Read More »
Interest Rate Changes and the US Dollar
Think about interest rates as the price of spending money. If the fed has raised interest rates, it has raised the cost of spending money. When interest rates rise. Read More »
NFP - Non Farm Payrolls
Introduction to Non-Farm PayrollsA classic example how how the forex market is moved can be found in the non-farm payroll (NFP) numbers published each month by the US government. Read More »
Fundamental Analysis vs. Technical Analysis
Fundamental analysis and technical analysis are the two most widely used methods for making trade decisions in the Forex market. Fundamental analysis helps Forex traders understand. Read More »
Green Belt
Ready to Get Technical? Once you have mastered the basics, you are ready to understand technical analysis. Learn the ancient art of Japanese Candlesticks as well more modern techniques like Elliot Waves.
Forex Chart Types
There are three main types of charts that are used by most traders in the forex market. Two of them, bar charts and candlestick charts, display basically the same information in. Read More »
Best Chart Choices
In trying to understand what financial data predicts in future returns of a particular currency, the investor can turn to different types of graphs in order to glean varying. Read More »
Choosing a Time Frame
Choosing a Time FrameAny Forex trader that intends to use charts for trading analysis must determine which time frames will be most useful. All traders, regardless of their. Read More »
Technical Analysis and Charting Indicators
Bollinger BandsPerhaps the most frequently encountered type of chart in the forex world are those depicting Bollinger Bands. Named after John Bollinger, a forex trader. Read More »
Support and Resistance
Support and resistance for a currency pair at certain price levels comes from several different sources. Either barrier is always at least somewhat psychological in nature. Read More »
Price Channels
Price channels are a chart tool used by traders to set buy and sell points for currencies. They usually consist of two parallel lines above and below the value of a currency. They. Read More »
Guide to Fibonacci Retracements
Fibonacci – The Nature of Numbers and RatiosThe study of Fibonacci numbers, retracements and extensions will feel strangely “out there” for most Forex traders – as if trading. Read More »
Moving Averages and Technical Trading
A moving average is a simple technique that lets chart-makers and analysts sift out a lot of the “noise” that short term price swings create. A more common term outside. Read More »
Bollinger Bands Introduction
Bollinger Bands are used as an indicator to compare both volatility and relative price levels over a specific time period. The indicator is made up of three bands that. Read More »
Common Candlestick Patterns and History of Japanese Candlesticks
It's not too often that tools of financial analysis have a near-mythical origin. In the forex market, however, the most common graphs are referred to as “candlestick”. Read More »
Japanese Candlestick Patterns
Candlestick analysis denotes a particular type of technical analysis derived from price information gleaned from a candlestick chart of a particular security. This type of. Read More »
Important Charting Patterns When Trading Forex
Important patterns exist within forex trading that offer traders cues as to when by or sell, and sometime as to what direction the market is about to move in. The following is. Read More »
List of Candlestick Patterns
Bullish Reversal Patterns(1) Strong Bullish Reversal Patterns: Abandoned Baby Morning Doji Star Three Inside UpThree Outside UpThree White Soldiers(2) Moderate Bullish Reversal. Read More »
Head And Shoulders Candlestick Pattern
Head and shoulders is a term that refers to a type of pattern-also called a trend-that is useful in gauging future market values of financial assets. In particular, the. Read More »
You have learned strategy, now it is time to learn tactics. OFXT ninja training is not complete without money management, commodity currencies or how to create a trading plan.
Commodity Currencies
Currencies of countries that rely heavily on the export of commodities are often referred to as 'commodity currencies.' An important factor that any Forex trader should. Read More »
Trading Cross Currencies
Trading Cross CurrenciesCross currencies simply refer to currency pairs, or crosses, that do not involve the US Dollar. As the US Dollar is the most heavily traded currency. Read More »
How to Trade Synthetic Crosses
A synthetic pair is a combination of two currency pairs that are combined in such a way that the trader's positions on the third currency mutual to both pairs – almost always. Read More »
Forex Options Basics
Understanding Options Options are usually associated with the stock market, but the foreign exchange market also uses these derivatives in trading. It gives traders the opportunity. Read More »
Money Management
Money management is one of the most important aspects of forex trading. Even the most brilliant traders aren't right anywhere close to a hundred percent of the time, and. Read More »
Risk Reward Ratio
Risk-Return RatioRisk-Return is a very important concept that a trader must understand and implement in order to be profitable trading the Forex market. The concept of Risk-Return. Read More »
Creating a Trading Plan
It is generally a good idea to create a trading plan ahead of time. Some trading strategies are more conducive to long term planning than others. Day trading and. Read More »
Brown Belt
We will prepare you to move forward and start trading on a demo account or a live account. Here, you will learn how to choose a forex broker, a money manager and what to do about taxes.
How to Choose a Forex Broker
For any Forex trader, the inevitable question emerges: “Which Forex broker is the best?” This guide will not answer this question specifically – the “best” broker. Read More »
How do I know if I can trust my forex broker?
How do I know if I can trust my Forex broker? For the most part, the steps a trader should follow in developing trust with a Forex broker are no different than the process that. Read More »
How to Pick a Money Manager
Many forex traders use money managers to deal with the profits they are not trading with in the forex market, or to manage all their investments for an extended amount. Read More »
Forex Trading and Taxes
Seeing profits from forex trading is an exciting feeling both for you and your portfolio. But then, it hits you. What about taxes? The forex tax code can be confusing at first. Read More »
Black Belt
You have made it very far and are looking for advanced strategies and techniques to master forex. Follow the strategies, learn what is best for you and how to be flexible when trading. Opportunities multiply as they are seized - Sun Tzu
How to Scalp The Forex Market
Scalping is a trading strategy that relies on more frequent and short-term trades than any other strategy. Scalping, by the way, is the single most vivid piece of terminology. Read More »
News Announcements And Trading
NFP is a monthly statistic collected by the U. S. Bureau of Labor Statistics. The acronym stands for Non-Farm Payroll. The statistic is released by the BLS on the first. Read More »
News Trading Strategy
“News trading” is just an odd phraseology used to describe forex trading centered around news-worthy events. Usually, these events are releases of important economic. Read More »
Range Trading
How To Range TradeThe forex market is unique to most other financial markets in that it does not need to be going up for there to be opportunities for profit. Range trading is. Read More »
Swing Trading Strategy
Swing trading is a style of trading used in the forex market or with high-cap stocks that aims to make gains by holding positions for a period ranging from one day to one. Read More »
Trend Trading
Trend trading is a basic trading strategy that works particularly well in the forex market. In many ways, it is the archetypal trading strategy: Try to buy low. Read More »
The Carry Trade. How to Trade Using Interest Rates
The carry trade is one of the most popular strategies in forex trading because it guarantees some type return on medium or long term positions. Unlike most strategies for the forex. Read More »
Create a Forex Trading System
When creating your own trading system, there are a few things to keep in mind. You are going to need to be able to spot trends, while making sure not to get faked out. The real. Read More »
Kamis, 06 September 2007
Learn Forex Trading | Forex Tutorial | Free
Why you should consider forex (Currency) trading as your primary business?
In forex trading, you decide when you want to work, how long you want to work, and how much money you want to make (You are the Boss) Forex trading requires limited equity and the yield could be unlimited You can make money anywhere (as long as you are connected to internet) and anytime (forex market opens 24 hours a day, 5 days a week) You can maximize your profit and limit your loss .
You will have a big probability to become financially freedom by trading forex. All you need to do is read this website for forex tutorial and guide, find your own profitable trading system (or use ours) and repeat making profit by your own trading system.
(I found a successful forex trader whose learned forex business by accident, recently he made a lot of money by trading forex, about tens of thousand dollars a month. and people starting to beg him to manage their money). And this could happen to you. Start learning forex and make money now !
What do you need to start trading forex ?
A Personal Computer (and PDA, optional and preferable) Stable and high speed internet connection Limited equity (for example $1000)
Reliable, reputable and trusted online forex broker
Only these. Absolutely. You dont need an office, otherwise you can start your business from home or anywhere else. Even when you are travelling, you still can make money. As simple as that!
What is Forex Trading ?
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.
The average daily trade in the global forex markets currently exceeds US$ 2 trillion. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks
What is traded in Forex Trading ?
The answer is Currency . Currencies are always traded in pairs, such as EUR/USD, GBP/USD, etc. Why. Because when you trade forex, you are exchanging 1 currency to another currency simultaneously (buying 1 currency and selling the other at the same instance). You will gain from differences of traded currency price rates. Dont get it. No problem, I will explain this very soon
When is the time to trade forex ?
Forex can be traded 24 hours a day and 5 days a week. The main trading centers are in London, New York, Tokyo, and Singapore, but banks throughout the world participate. The biggest foreign exchange trading centre is London, followed by New York and Tokyo.
Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the US session and then back to the Asian session,
excluding weekends
The following approximate market schedule is based on New York local time: japan forex markets open at 19:00 followed by singapore and hong kong that open at 21:00. European markets open in frankfurt at 2:00, while london opens at 3:00. New york forex markets open at 8:00. European markets close at 12:00 and australian markets start again at 18:00.
What are the benefits of forex trading
Two way opportunities . that means you can earn profit from upward or downward price movement. For example if you buy (go long) and the price moving upward, you will be in profit. and the otherway, if you if you sell (go short) and the price moving downward, you will be in profit
Extreme liquidity of the market . Forex is the most liquid market in the world, and that means you can buy or sell anytime you want
Long trading hours . Forex allows you to trade 24 hours a day and 5 days a week (except on weekends).
Leverage to amplify your profit . you can use a relative small quantity to trade bigger amount (usually from 1:50 up to 1:500) for example you have $100, without leverage your profit is only $0.01 but with 1:100 leverage your profit will be $1. (leverage makes your profit 100 times bigger, this also applies to loss).
Free of comission, Relative Low Spread Cost . usually online forex brokers offer you comission free trading, no brokerage fee, no exchange fee, and smaller trading transaction cost.
Flexible Trading Lots . you can trade rather standard lot (100K), mini lot (10K), or even micro lot (1K)
Automated / Robot Trading . some trading platform such as Metatrader enables automated trading
Factors affecting forex trading
Although exchange rates are affected by many factors, in the end, currency prices are a result of supply and demand forces. Supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.
Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories:
Economic factors
These include economic policy, disseminated by government agencies and central banks, economic conditions, generallyrevealed through economic reports, and other economic indicators.
Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a
government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
Political conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets. For instance, political upheaval and instability can have a negative impact on a nation's economy. The rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.
Market psychology
Market psychology and trader perceptions influence the foreign exchange market in a variety of ways:
Long-term trends . Currency markets often move in visible long-term trends. Although currencies do not have an annual growing season like physical commodities, business cycles do make themselves felt. Cycle analysis looks at longer-term price trends that may rise from economic or political trends.
"Buy the rumor, sell the fact" . This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought". To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Economic numbers . While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect - the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.
Technical trading considerations . As in other markets, the accumulated price movements in a currency pair such as EUR/USD can form patterns that may be recognized and utilized by traders for the purpose of entering and exiting the market, leading to short-term fluctuations in price. Many traders study price charts in order to identify such pattern
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