Always knowing the trend and always trade in the direction of the trend.

When the inflation is up central banks try to keep it low by leveraging interest rates. When interest rates are up then the currency is supported. Learn what economic indicators reflect the inflation and the decision of central bank about interest rates and you have an extra tool in your arsenal in order to trade.

On the other hand ignorance of the trend will cause an insurmountable obstacle to profitable trading. If you don’t know what the trend is for the currency pair you are trading you will never consistently make money trading the spot forex.

There is a great controversy between traders that use only technical analysis and traders that use only fundamental analysis. For me this is only academic. If there is information out there you should carefully watch it. Do not rely only in technicals or fundamentals. Use both. When you have a solid technical pattern that is supported by fundamentals then the chance that you are right is imminent. When technicals and fundamentals show in different directions then you should watch out. Do not be trigger happy with your Forex trading. Wait and see. Forex is not for prophets. You use scientific analysis in order to maximize the chance that you correctly recognize what the market has to give you. Analyze thoroughly, have a solid technical pattern, know the fundamental support of your analysis and you have a nice trading decision. Seize your risk tolerance and you will be a winner.

Trend indicators and tools are available in commercial packages, trading platforms and software packages. Many of them are good but not well understood.

posted by Administrator at 4:36 am & filed under Currency markets |