Know Fundamental & Technical Analysis in Forex Trading
Forex trading is the new fad in the investing public. You will find many new gurus in the market paddling their courses. If these gurus had been so successful at forex trading they did not need to sell forex trading courses.
These gurus will tell you that forex trading is very easy. Anyone can do it from the comfort of their homes. You only need a computer and an internet connection. No doubt, the internet revolution has made it possible for anyone to trade forex from anywhere in the world.
But nobody will tell you that out of 100 new traders; only 5 survive in the long run. Forex markets are brutal and unforgiving. Only the best will survive. 95 of the new traders will lose their money and quit in a few months or maximum one year.
Why 95% of the new traders fail? Simple, because they assume that by reading one or two eBooks, they will understand forex markets. Forex markets are far more complex and complicated to understand in one or two eBooks. You cannot succeed at forex trading until you start living and breathing it.
You need to understand how the forex markets work. What are the economic factors that move the currency markets? How interest rates, GDFP growth, unemployment ratios affect the currency markets. As long as you dont develop this gut feeling, you should not start trading forex.
Learn fundamental and technical analysis. Some people say both are exclusive and require different strategies. But I say both supplement each other. Fundamental analysis can help you predict the general trend in the forex market in the medium to long run. Fundamental analysis studies the underlying economic factors that affect the currency markets.
Technical analysis is a more specialized field. It studies the movement of prices in the past to predict future prices. Forex markets are ideally suited for technical analysis. If you want to become a short term trader, then you will have to become an expert in technical analysis.
Technical analysis depends on the proper use of a number of indicators that you need to understand and master. These indicators can provide you will information regarding the market whether it is trending or ranging. This will help you devise your strategy. It can also tell you about the entry/exit for each trade.
Those who have been stock trading can switch to forex trading rather fast. But as long as you dont make forex trading your passion, you will never become a winning trader. If you want to succeed than take forex trading as a passion and learn everything about forex you can.
