How to Start Forex Trading
Trading forex markets requires attention to both technical analysis and fundamental analysis. Fundamental analysis is the study of economic indicators from country to country to establish trends in the numbers and to take market positions based on future expectations of world economies performance.
Technical analysis focuses on pure market performance and how the market tends to repeat certain patterns before large movements take place.
All major market players decide which factor is more important to them and how long of a timeframe is needed for those events to occur.
In trading Forex timing can be just as critical as any other factor and that’s at work here. Sometimes the market will deviate from the projected performance of economies to focus on other factors or because bubbles are forming which distort the expectations of the market place.
So lets look at a few fundamental pieces of news and see how important they are to the trading markets. Probably one of the largest numbers is always US Non Farm Payrolls.
Large swings in these numbers leads to large volatility in the currency market as we align our future expectation for current US economic performance and in turn how that affects worldwide markets.
Also GDP, CPI, PPI and FOMC monetary policy decision are closely watched pieces of information. Around the word in Europe we tend to watch IFO, unemployment and GDP as the main numbers along with any comments from ECB President Trichet.
In Japan, Australia, New Zealand and the UK general numbers such as retail sales, monetary policy and trade figures tend to be the most watched.
In technical analysis the most common things people look for fall into two categories, more of which can be viewed over at Forex Lasers. Standard technical indicators such as moving averages based on the 20 100 and 200 periods on charts such as the 1 hour, 4 hour and daily charts.
Also used are stochastics with standard settings and the RSI to confirm the direction of market movement. Next comes into play typical market patterns such as head and shoulder, wedges, triangles and other more complex chart readings.
Financial market trading is always complex and many people make use of various factors depending on how easily they can follow and identify the factors themselves. it takes time, patience and experience to utilize these tools and also to make a profit from them. Hopefully with the knowledge of what makes markets move it gives you the reader a better understanding of our market.