How to start trading Forex?

How to start trading Forex?

To operate in Forex it is necessary to have a strategy that allows you to take advantage of the rapid changes and market circumstances. There is no short way to develop a strategy, it is necessary to put it to the test in different situations. This means that every trader must invest considerable time on analysis of graphics, news reading and keeping updated economic announcements.

Investigate

Like any profession, it is important to be aware of the contributions of currency pairs which are interested to operate and make research on the subject. Before trading in any pair in particular, it is important to make a questionnaire with questions and find the answers. Some of the questions that this questionnaire could include are:

• What strong is the economy of A country in relation to the country B at this time? This question can respond by looking at the current gross domestic product, the unemployment rate and the indicators of production, among others.
• Is it one of these currencies considered as a safe haven? Historically, the dollar was always considered a safe currency, but this may change for various reasons such as United States debt-ceiling crisis.
• How has reacted the currency against different news in the past? Take a look at the behavior of the currency allows traders to make an analysis in perspective with respect to how the currency might react.

Be informed

Once you have identified that you move to a currency in particular, it is essential to follow the news. There are multiple resources, since newspapers specialized in finance to web sites, which may vary depending on the country. If you choose to operate in a given pair, it is always convenient to be updated of the economic situation in both countries.

There are some economic announcements which are essential to bear in mind because they impact on the market, such as the rate of unemployment in the United States or the European Central Bank monetary policy announcements, for example. In all cases, always must be careful in how it impacts on the pair.

Fundamental analysis is always key to Forex, but so is the technical analysis. Graphics allow you to understand how the different news have impacted the currency cross historically, view points of return, identify support and resistance levels, and discover trends. Once it has done this analysis, it is easier to learn to interpret market and updates its position for the future.

Focus

The exercise can be exhausting at times, by which traders must be selective. It is advisable to choose a currency specific to start and learn what to do and what not to do. Each pair is correlated to some extent with the financial markets. For example, the USD/JPY pair possibly has some correlation with the Nikkei. To identify correlations, best thing to do is to see the graphics since the visualization process can always help to eliminate doubts.

When the market moves quickly, the more experienced traders know that they must rely on their strategies, what never should do is let yourself be carried away by emotions and change the strategy once it has already developed and launched.
 

Indicators

It is best to use a limited number of indicators, since a variety can cause much distraction. There are many traders operating in Forex using only one indicator, as for example supports and resistances. It is important to analyze which indicators are most adapted to our needs of trading.

Finally, develop a balanced strategy incorporating fundamental and technical analysis with a limited number of crosses of currency can lead to a successful Forex trading.