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Apply “the Secret” To Forex Trading Success

The Forex market is the largest trading network in the world with $1.8 trillion dollars being exchanged every day.  There are dozens of different currencies traded but the big players to focus on are all traded with the US dollar and include:  EUR (Euro), GBP (British pound), JPY (Japanese yen), CHF (Swiss franc), AUD (Australian dollar), NZD (New Zealand dollar), and the CAN (Canadian dollar).  Each of these currencies is exchanged with the currency of other nations at different exchange rates—which are always in a state of flux because the market trades around the clock (Sunday through Friday). The volatility and sheer size of the market means that there is ample fluctuation to produce big profits—and losses.  The challenge for the investor, as always, is to predict which direction the rates of currency pairs will fluctuate.

The beginning point in any investment strategy is determining what type of analysis will be used to help guide enter and exit decisions.  Investors who use fundamental analysis look at a nation’s interest rates and other economic indicators when deciding to enter or exit a position.  Fundamental investors tend to trade based upon news releases and economic data from the nations involved in the currency pair.

Briefly, technical analysis involves the interpretation of price performance and chart patterns—all historical data.  Some technical indicators used in this type of analysis include:

Moving averages including Simple & Exponential
Breakout Points
Lines of Support & Resistance

Technical traders do not believe that the past necessarily predicts the future—but that long and short term trends can be identified and exploited to help guide current decisions on entry and exit points on positions.  Technical traders try to identify current trends in the Forex market to determine entry and exit points.  If they are correct, they can ride a trend (in either direction) for a profit until an exit point is reached (when the trend is ending).

The most successful traders on the Forex tend to look for long-term trends and favor technical analysis.  Fundamental traders have to enter and exit positions very quickly in order to capitalize in price fluctuations caused by news events (interest rate changes, release of economic data, etc.) and are therefore more vulnerable due to excessive trading.  If there truly was “a secret” to trading success on the Forex, the top investors all tend to agree on the following:

1. Choose currency pairs involving U.S. dollar (has volume to produce the price fluctuations necessary for big profits and the liquidity to enter/exit positions at will)
2. Find currency pair through back-testing that has most profit potential (pip movement) and least volatility through use of technical analysis
3. After determining trends, set stops and exit points for both protection and maximum profitability
4. Review charts once per day (over-trading and day trading can hurt your portfolio)
5. Remain patient and exit positions once technical decision point has been reached

If there really is a secret to trading success on the Forex it has to be patience.  Trading strategies are never perfect because the market will never be predictable 100% of the time.  There will be times when any strategy fails and stop points are reached before profits are realized.  Continuous back testing, remaining patient, and setting stops are the true secrets of Forex success.

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15 comments:

  1. Honestly,I went through your write up and I shook my head..forex trading is a big risk..all this predictions are not 100% correct...The implication is you should brace up to cover some heavy loses at times.I guess we are all groping in the dark.. the free stock course has been helpful though

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  2. These are timeless investing tips for those that really want to start trading forex. I'm learning the ropes and will keep on all tips in mind.

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  3. Patience pays also applies in forex trading. This a good virtue to apply not only in life but also in business as it goes.

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  4. I definitely need this stock education on forex. I have read so my good things about investing in forex but I'm yet to take the bold steps.

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  5. An amazing forext stock course. Trading with US dollars is not only safe and secure but can also bring in high returns. I love your insightful tips.

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  6. Forex trading or any stock for that matter requires effort. Fortunately we have you to guide us.

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  7. These are amazing investing tips for anyone interested in making it big in forex trading. Just like technical traders, they are interested in long-term profits.

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  8. Once, I had gone through the option of Forex trading to earn online. However, as there are risks involved, we need to have a thorough stock education before starting.

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  9. I think the best step to learning is to take a free stock course. That will boost your knowledge and maybe you can move to premium.

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  10. Stock education is the key to be able to use the stock market effectively and efficiently. These secrets will go a long way towards helping someone towards greater success in the future.

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  11. This is an interesting way to apply 'the secret' to forex trading. I will definitely have it in mind during my trades.

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  12. Choosing currency pairs involving the US dollar is a superb investing tip. It makes work easier and less complicated.

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  13. I am glad I went through the free stock course. I would be totally not understanding any of this if I hadn't.

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  14. Stop and exit points can be very helpful in forex trading. Knowing when to stop can prevent a trader from following losses.

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  15. Technical traders have an interesting way of looking at penny stocks. They are very pragmatic and I very much like them.

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