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The .382 Fibonacci Ratio
Strategies for Forex Trading
Although Forex trading is the oldest and safest in the world, an investor going into the currency market must educate himself on sound strategies in order to succeed in this volatile investment market.
Successful investors in currencies know that they should never buy or sell out of greed or fear. The successful Forex Investor educates himself early so that he takes a minimum of risks when trading.
Courses in Forex Trading are offered online at reputable sites. There are also sites online that help a beginning investor set up demo accounts that facilitate in familiarizing the investor in the multiple variables that affect Forex Trading.
Once an investor has learned to read the charts and graphs that pertain to the currency market, he should learn how to analyze information coming from newscasts and press releases from the corporate and governmental sector.
With Forex trading, there is no threat of insider trading because everyone in Forex is an insider buying and selling the same commodity. Successful Forex investors learn to listen to fellow traders.
Although Forex investment is the most lucrative in todays global market, an investor must be cautious and maximize his profits while minimizing his risks.
Its an old adage, but, in order to be successful in Forex, it is an adage that must be followed religiously. Successful Forex investors hone a strategy and only deviate from it when all rational indications suggest doing so, but deviation from a proven strategy is a rare exception.
See Also:
Common Sense Capital Staff Biographies
What Is Forex Trading
What Moves Forex Rates?
The following have an impact on Forex Rates: Politics Economic Strength Speculation Economic Projections Rate of Inflation Policies Regarding Intervention and Rates of Exchange Movement of Capital Payment Balancing Interest Rates Quotas and Tariffs
The individual investor in Forex Trading must arm himself with the knowledge of the multiple factors that make Forex Rates move and currency trading such a volatile investment.
The individual investor must educate himself on all of the above variables and become proficient in reading graphs and charts and making rational investment decisions based on what he preserves are market trends suggested by large corporate entities and fellow individual Forex Investors.
Although the Forex Market is the most lucrative in the world, it is not a market for speculation and haphazard buying and selling out of fear or greed. The individual investor must educate himself and move carefully if he is to achieve success in this complex playing field.
But it is not all about numbers and charts. It is also about governments and speculators and human psychology as well as imposed rules and regulations.
Even though the Forex Investor is in control of his portfolio at all times, he must keep in mind that outside forces controlled my a myriad of factors including governmental policy are really in control of the market. |
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Intermediate Forex Trading
There are many different intervals in forex trading, including scalpers (very short term), day traders (short term), intermediate traders (days), and investors (week, months, even years). Intermediate trading is advantageous for several reasons, and this is why it is perhaps one of the more popular trading intervals used.
Intermediate trading allows you to look at the market and say "this is where I think prices will go over the next several days". This allows you the opportunity to enter a position that you can hold for long enough to get through all of the "market noise", price action that occurs but is not relevant to the trend you are pursuing.
You should be aware that in order to trade over the intermediate term, you must scale back your leverage a bit to avoid margin calls as the result of this noise.
Intermediate trading is based largely on technical analysis, to include the usage of indicators, trend lines, and support and resistance lines on charts. However, it is helpful to also include some fundamental analysis in your decision.
Rather than the fundamentals that would tell you where a currency will be next year, use fundamentals to help you gauge the current market sentiment on the currencies you are trading. This can help you to know whether there is a particular favorite in the market, or if sideways action will occur because of market indecision.
As with any trading time frame, you should always be looking at three intervals of charts. For intermediate trading, perhaps the best way to do this is with daily charts for the overall trend, two- three- or four-hour charts for your actual trading, and one-hour charts for details, especially on good entry and exit points.
What indicators you choose for each of these charts will be up to you. However, you should never operate off just one time frame because you will miss the bigger picture of where price is going, and you will miss the perfect entry and exit points provided by the smaller time frame.
No matter what, leave room for prices to move against you. Study the charts for indications of how prices swing to know how much room to leave yourself on the trade, and consider stop-loss orders to help you avoid further loss.
The one thing you should never do is put yourself in the position of a margin call.
Related Topics: Forex Money Management,
Forex Trading Losses, Getting Started in Forex Options
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