Forex Trade – Intelligent Forex

Fundamental Trading Tips to Get Started Trading Forex Profitably

Posted in Forex Tips by intelligentforex on January 8, 2010

The Forex market has an average daily turnover of four trillion dollars, making it the most liquid financial market in the world. It is very easy for a beginning trader to lose their way in this market, and be left in financial ruin if they do not follow simple guidelines and a strategy that is well suited to their trading style. Here are a few fundamental Forex trading tips for the beginning trader, which will hopefully guide you in creating a strategy of your own.

Know the analysis – Technical analysis is a technique for forecasting future prices of a currency using analytical tools; the most popular tool being moving averages. There is also fundamental analysis which uses economic factors such as announcements on economic stability, interest rates etc to forecast the future price of a currency. It may be difficult at first to understand how to interpret the information of these two analysis techniques but it is important to know how and when to use them in Forex trading.

Know when to walk away- Do not be greedy; we would all like to watch a currency rise or drop to our advantage, make a ton of cash and call it a day; Am afraid the Forex market is a little more complicated than that. Case and point: You will hear many stories, for example a trader in the US made 40 ‘percentage in points’ (pips) on NZD/US in 20 minutes and instead of closing, left an open position till morning hoping it would rise even further. The Interest rates were announced in New Zealand while he slept and his investment account was wiped clean. After performing your analysis and making a position on any currency pair, it is advisable to set a target price or take profit price to automatically close your open positions when you’re set profit price is reached; most trading systems will allow you to do this. In addition never take any position on any currency pair without setting an acceptable stop loss i.e. the total amount you wish to risk.

Know when to play – The Forex market, is a 24 hour market, that operates from Sunday 5pm EST to Friday 4pm EST. Personally I find that the best time to trade is when both the London and the New York market trading sessions overlap at 1pm and 4pm GMT or when the Sydney and Tokyo market trading sessions overlap at 11 pm to 7 am GMT. In time you will find that greater volumes are traded between these periods which results in more opportunities to make trade positions that can realize anywhere between 40 to 80 ‘percentage in points’ to your advantage.

In conclusion, I will leave you with some parting words; if this is the beginning of Forex trading for you and you do not wish to risk too much, avoid the major currency pairs (EUR/USD, GBP/USD, USD/JPY); as these tend to be much more volatile and sensitive to economic speculation. You can always increase you confidence in analysis and ability to decide when to trade, with the other currency pairs until you are ready. I hope you found these tips informative.


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