The key to making money in the currency exchange market is to avoid
emotional decisions and to follow a carefully thought out strategy that
takes the current market and history into account. Going with your gut
is not the way to go in the Forex market. Going with your gut could cost
you money. Forex trading is a highly volatile market where emotions
tend to run high. Emotions can influence your trading decisions, unless
you have a strategy planned in advance, and stick to it, no matter what
you think you're seeing at the moment. The keys to success in Forex are
system, analysis and perseverance.
Most experienced traders tell novice traders that they need to
develop a system — and stick to it no matter what. Letting your emotions
rule your decisions can hurt your trading in a number of ways. The
system tells you when to buy, what to buy, when to trade and what to
trade for. By sticking to your system you'll maximize your profits. A
system based on technical analysis of historical market trends is one of
the most potent tools that you can utilize if you're just getting
started in Forex trading. Many traders, with years of experience,
continue to use this system to keep the profits rolling in. Many traders
will tell you that when their gut instinct and their system collide,
the system is almost always right.
Using a mechanical system takes the emotion out of your trading,
eliminating one of the reasons people fail. Your system doesn't sway
with emotions. It sticks to a tried and true course. To be effective,
your system — whether you develop your own or adopt one created by
someone else — should identify the entry and exit point of your trade,
mitigating factors, and an exit strategy. In general terms this is as
follows:
Under what conditions should I acquire a currency?
For instance, you may have a buy order for when a particular
currency drops more than 5 pips because your analysis tells you that
that's likely to be as low as it goes.
When should I trade one currency for another and for which one?
There are two reasons to exit — to maximize your profit, or
minimize your loss. That means you have a set stop-loss order and a set
take-profit order at which point you cash out your trade.
What factors will I allow to change that decision?
While the money market moves in predictable patterns, there are
always individual variations of a trend within those patterns. If you've
taken those variations into account, it will be far easier to decide
when a factor really does make a difference, and when it's just wishful
thinking. If you're not careful however this is where emotion could come
into play and sour deals for you.
How will I trade out of a currency?
Your exit strategy may be as simple as a stop-loss order when my loss hits 5% or a take-profit order when I make 40% profit'.
Another key is perseverance. Analysis of trends in the market
will show you that the market moves in dips and spurts within overall
patterns that are predictable. No trend moves smoothly in an up or down
line — there are inevitable periods of time when values suddenly spiral
up or down based on some outside factor.
These are the times when
emotion can hurt your portfolio. When a currency that you're holding
takes a sudden dip south, it's tempting to succumb to panic trading, cut
your losses and run even if your system tells you to hold on. On the
other hand, it's easy to catch the rising excitement as a trade starts
increasing in value and scramble to buy more of the same. These are
exactly the times to rely most heavily on your trading system. It will
tell you exactly when to trade for maximum profit.
If you control your emotions and stick to the system you'll maximize your profits and all should be smooth sailing. by David Mclauchlan
Sunday, October 20, 2013
Forex Trading Is Driven By Five Top Economic Indicators
Many factors affect Forex trading. It is critical to know and
understand the various factors that cause the Forex to fluctuate from
day to day. The foreign exchange market will change depending on the
economic factors that play a role in the movement of currency. Guest post by David Mclauchlan
Economic factors and indicators are released by the government or by private organizations that can look in depth at economic performances. These indicators can be used to analyse economic performances from any country. The economic reports measure a country's economic health, in addition to government policies and current events.
For the most part, a reputable broker can look at economic indicators and know which trades will be best. Reports on these indicators are released at scheduled times and can tell if a certain country is experiencing improvement in the economy or if the country's economy is on the decline. When the prices fluctuate, a great deal one way or the other, the price can be affected.
Current events and the state of the economy in any given nation is one of the top economic indicators used when analyzing the Forex. Factors such as unemployment numbers, housing statistics and the current state of a country's government can all affect changes in the Forex. When a country is feeling optimisitic about the current state of affairs in their country, prices of the Forex will reflect this. When a nation experiences political unrest, large amounts of unemployed workers and inflation, the rate of the currency will be reflected. Sometimes, this indicator tends to be overlooked, but can serve as an important gauge in the fluctuations of the Forex.
The gross domestic product,or GDP,is another economic indicator used when looking at the foreign exchange market. The GDP is considered the widest and broadest measure of the economy in a country. The gross domestic product represents the total market value of all goods and services that are normally produced within any given country. This is usually measured in the time frame of a year, and not in weeks or months. Using a larger time period gives good statistics on the products and services that are produced in the country. This indicator is not used alone when forecasting the Forex. The GDP is considered a lagging indicator, meaning that is a measurable factor that changes after the economy has already began to follow a certain trend.
Retail sales reports are the third economic factor that is often used in analyzing the Forex. This is the total receipt of all retail stores in any country. Usually, this measurement is not every single retail sale, but is a sample of diverse retail stores throughout the country. This is considered a very reliable and important economic indicator because of the consumer spending patterns that are expected throughout the year. This factor is usually more important that lagging indicators and gives a clearer picture of the state of the economy in any country.
Another reliable economic indicator in the foreign exchange market is the industrial production report. This report shows the fluctuation in productions in industries such as factories, and utilities. The report looks at actual production in relation to what the production capacity potential is over a period of time. When a country is producing at a maximum capacity it positively affects the Forex and is considered ideal conditions for traders.
The consumer price index, or the CPI, is the last critical economic indicator in analyzing the Forex. The CPI is the measure of the change in the prices of consumer goods in 200 categories. This report can tell whether or not a country is making or losing money on their products and services. The exports that a country has are very important when looking at this indicator because the amount of exports can reflect a currency's weakness or its strength.
The Forex is affected by many factors. These factors usually follow a certain trend so it is important to understand how each factor works in forecasting the Forex. Some are good indicators alone while others should be used together for accurate Forex predications.
Trade Forex Like a Pro- Revealed the secret of the floor traders, How you will be successful trading forex using price. This is proven method tested that is making over $1,250 Monthly. No sorry, no complicated calculation. This is as simple as "ABC" B
Economic factors and indicators are released by the government or by private organizations that can look in depth at economic performances. These indicators can be used to analyse economic performances from any country. The economic reports measure a country's economic health, in addition to government policies and current events.
For the most part, a reputable broker can look at economic indicators and know which trades will be best. Reports on these indicators are released at scheduled times and can tell if a certain country is experiencing improvement in the economy or if the country's economy is on the decline. When the prices fluctuate, a great deal one way or the other, the price can be affected.
Current events and the state of the economy in any given nation is one of the top economic indicators used when analyzing the Forex. Factors such as unemployment numbers, housing statistics and the current state of a country's government can all affect changes in the Forex. When a country is feeling optimisitic about the current state of affairs in their country, prices of the Forex will reflect this. When a nation experiences political unrest, large amounts of unemployed workers and inflation, the rate of the currency will be reflected. Sometimes, this indicator tends to be overlooked, but can serve as an important gauge in the fluctuations of the Forex.
The gross domestic product,or GDP,is another economic indicator used when looking at the foreign exchange market. The GDP is considered the widest and broadest measure of the economy in a country. The gross domestic product represents the total market value of all goods and services that are normally produced within any given country. This is usually measured in the time frame of a year, and not in weeks or months. Using a larger time period gives good statistics on the products and services that are produced in the country. This indicator is not used alone when forecasting the Forex. The GDP is considered a lagging indicator, meaning that is a measurable factor that changes after the economy has already began to follow a certain trend.
Retail sales reports are the third economic factor that is often used in analyzing the Forex. This is the total receipt of all retail stores in any country. Usually, this measurement is not every single retail sale, but is a sample of diverse retail stores throughout the country. This is considered a very reliable and important economic indicator because of the consumer spending patterns that are expected throughout the year. This factor is usually more important that lagging indicators and gives a clearer picture of the state of the economy in any country.
Another reliable economic indicator in the foreign exchange market is the industrial production report. This report shows the fluctuation in productions in industries such as factories, and utilities. The report looks at actual production in relation to what the production capacity potential is over a period of time. When a country is producing at a maximum capacity it positively affects the Forex and is considered ideal conditions for traders.
The consumer price index, or the CPI, is the last critical economic indicator in analyzing the Forex. The CPI is the measure of the change in the prices of consumer goods in 200 categories. This report can tell whether or not a country is making or losing money on their products and services. The exports that a country has are very important when looking at this indicator because the amount of exports can reflect a currency's weakness or its strength.
The Forex is affected by many factors. These factors usually follow a certain trend so it is important to understand how each factor works in forecasting the Forex. Some are good indicators alone while others should be used together for accurate Forex predications.
Trade Forex Like a Pro- Revealed the secret of the floor traders, How you will be successful trading forex using price. This is proven method tested that is making over $1,250 Monthly. No sorry, no complicated calculation. This is as simple as "ABC" B
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