Review Category : Trading Tools

The Beauty of the Metatrader 4 Forex Trading Software

The Beauty of the Metatrader 4 Forex Trading Software

This article looks at the benefits of using the Metatrader 4 Forex trading platform.

The increased number of brokers in the Forex world has equally led to an increase in the different types of trading platforms available for use by traders. However, just as it is with most online services, not every Forex platform is effective and can be trusted. The Metatrader 4 platform, however, is undoubtedly the most popular Forex trading software out there; and, importantly, one that meets the needs of the majority of traders.

This platform, designed by Metaquote Software, is one that is free to use, and it equally offers unlimited open source capabilities. It is considered as the Android OS of the Forex trading world.

Features of the Metatrader 4 Forex Trading Software

At first glance, this Forex trading software may not impress that many people, as it doesn’t have all the flicks and shiny tweaks that are common to most platforms; but a closer look reveals that this software offers many powerful features like a multi-lingual trading interface, so many types of indicators and analytical tools, a wide range of expert advisors and unlimited charting ability. It also offers fast and accurate performance.

Apart from the indicators available by default on the platform, a trader can write a customised indicator and install it on the Metatrader 4 platform. This explains why there is virtually a custom indicator for every activity you can think of in trading. This is one advantage that the Metatrader 4 platform has over competing software.

The Metatrader 4 Forex trading software also allows you to use expert advisors and strategy testers, which will allow the trader to perform a quick back test on real historical data. The multi-window view is also a huge advantage with the Metatrader 4 platform.

On this Forex trading software, you can also have as many accounts as you want stored on the platform, and any time you want to log into any of the accounts, simply click on the particular account and you will be logged in to it. You do not have to type anything after saving the account on the platform the first time.  You do not have to worry about differentiating between a demo account and live accounts, too, as the accounts are denoted by green and yellow colour codes.

With every update, the Metatrader keeps getting better. Presently, it is now possible for a trader to carry out a trade with a single click on the instrument of their choice – something referred to as one-click-trading. You can also modify stop loss or take profit orders by simply dragging the lines across the charts to any location of your choice, thereby making trade management a lot simpler for traders.

The simplicity of the Metatrader 4 platform is one major aspect that has made it a very popular choice among traders. However, the simplicity of the Metatrader doesn’t mean you should not try it out on the demo account first, before using it live, as it could look confusing to someone using it for the first time.

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Stop and Limit Orders for your Live Trading FX Week

Understand Stop and Limit Orders before you Start your FX Trading  FX Week

A look at different types of stop and limit orders you must be aware of as you enter your first fx week.

During demo practice trading it is common for traders to only click on buy and sell; but there are other ways of placing orders you must know about before entering live trading. These other methods of placing orders help traders to enter the market according to their trading style and pattern.

You may have heard of ‘limit orders’ in Forex communities, but there are quite a few individuals who are oblivious to the fact that such orders even exist.

In this article, we will be looking at the difference between placing a buy and sell order with stop loss, and placing a limit order. This will put you in a better position as you start your FX week.

When you hit the buy or sell button, you are telling the broker to put your money in the market at the current price you are looking at; but when you place a stop or limit order, you are telling the broker to only take you into the market, or out of the market, when the price gets to a certain point.

Using a Stop Loss in the Coming FX Week

A stop loss order is simply a provision that allows you to close a trade to prevent excessive losses. As soon as the stop loss level is breached, your position is automatically closed by the broker. This normally happens when the market goes above or below the price you set as your stop loss by 1 pip. A stop order automatically turns to a market order when that price is reached. Stop loss is simply a term coined by traders, so it not really an order type. With a stop loss in place, a position that would have gone against you by 200 pips might only go against you by 50 pips or less. The number of pips you are going to set as stop loss is entirely dependent on you and your trading strategy. It is advised that you do not make your stop loss too tight or too far away from the entry price. If you still do not understand how to place a stop loss, it is advised that you read up more on the subject.

Using a Limit Order

A limit order is simply a price at which you are expecting a trade to be implemented. It is the maximum price or minimum price you are expecting to buy or sell. This type of order is used by traders who want a trade to be filled only if the market gets to a specific price. Limit orders, however, have their downside, too. Some brokers charge higher spreads for filling you in on a position through a limit order; and, of course, there is no guarantee that your order will be filled until the market gets to that level. Another problem with using limit orders is that the trader’s order could get filled by a spike, only for the trade to reverse. This is why you must also not forget to use a stop with your limit order. There are different types of limit orders

BUY STOP – This is placed above the current market price in anticipation that the market will continue rising after getting to a particular level.

SELL STOP – This is placed below the current market price in anticipation that the market will continue falling after getting to a particular level.

BUY LIMIT – This is placed below the current market price in anticipation that the market will start rising after falling to a particular level

Sell LIMIT- This is place above the current market price in the hope that the market will begin to fall after rising to a certain level.

With this out of the way, your first live FX week is poised to start off on a positive note.

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Get the Best Currency Forex Converter

How to Get the Best Currency  Forex Converter

A forex converter is a type of currency converting tool that is very useful when dealing in the exchange of currencies, because it saves you the headache of the many computations involved. It’s a very useful tool, especially for travellers.

The article below contains all the necessary information about how to acquire the best Forex converter, and also a few steps to help you master its usage. Read on carefully to understand how to get the best currency converters, and also learn how to use them.

How to Purchase a Good Currency Converter

A currency converter is a very useful tool to have in the world of Forex, and also as you travel around the world. It saves you the headache of having to calculate the difference between various currencies manually. This tool enables you to quickly and easily compare different currencies according to the market exchange rates.

Read the tips below to find out how and where to get the best currency converters:

  • First, choose a currency converter which has a combination of languages and other properties. It should also have a translator in order for you to be able to use it whenever you are in different parts of the world. The “talking” converters are usually more expensive than the others, but they are usually pocket-friendly when you consider the trouble you will go through without one, so get one even if you have to pay a pretty penny.
  • Make sure that the currency Forex converter you purchase has all the basic functions, such as a calculator and other added features like the ability to be reprogrammed to various currencies at different times during the day.
  • Nowadays, you can choose your desired currency converter depending on the type of power it consumes. Converters come in different designs: some use batteries, others solar power, while yet others use AC electricity. For your travelling needs, I would advise that you opt for the battery-powered or solar one, since you will be on the move.
  • Since they now come in many designs, choose one that suits you. For , the pocket-sized one is usually advisable because it’s more portable than all the others.
  • Before purchasing a currency converter, visit different websites that provide product descriptions, and compare the prices, user ratings and descriptions of different currency converters available in the market.
  • Make sure you understand whether the converter is in real timeor if it had a delay.  For holiday conversions inaccuracy may be acceptable, but for trading you will want up to the second accuracy.

Tips on How to Use an Online Money Converter for Currency

Depending on the type of currency converter you are purchasing, use the tips below, and they will help you to start using the currency converter as an alternative to “brain-racking.”

  • After locating the type of converter you want to use – for example, the MSN currency converter – check out if it’s working properly by doing a trial run. This is because you never know whether or not it works properly until you first test it.
  • Next, enter the amount of cash you want to convert to the currency of your preferred country. You can key in the numeral ‘1’ if you want the machine to give you the rate differential between the two different currencies you want to trade in.
  • After this, choose the currency you intended to convert your cash into, and press the enter or submit key. The results will be displayed on the screen, and you can view them.

Conclusion

A currency converter is a very important tool: one that is very useful if you travel around quite a bit, or if you want up to the minute exchange rates for trading reference. Be sure to get the type and model that suits your activity while, at the same time, ensuring that its price is reasonable enough to justify the purchase. Online tools are normally free and can of course be accessed through your smartphone.

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An Introduction to the Foreign exchange market

An Introduction to the Foreign exchange market

The economic success of the forex market is huge. With around four trillion U.S dollars being traded on a daily basis, it is by far the largest of all the financial markets. It is more than a hundred times the value of the New York Stock Exchange, which is considered the second largest. The biggest forex markets in the world are in London, New York, Tokyo, Hong Kong, Singapore, Sydney and Frankfurt.

Foreign currency exchange involves trading the currency of one country for another foreign currency. Currencies have different values that fluctuate against each other constantly. This is what forms the basis of forex trading, as traders try to gain from the currency value fluctuations. The biggest traders in the forex markets are large banks, multinationals and governments. Thousands of small individual investors and forex trading companies also participate in the markets. Forex trading can be very lucrative if you know how to trade well in the foreign exchange market. You need to know how the foreign exchange rates behave in relation to various economic factors and market conditions.

With the incorporation of information technology, foreign exchange trading has become easily accessible to anyone with an internet connection. Everything you need to know or do regarding forex trading is available online. Sitting at home you can learn about forex trading, open a trading account and start profiting from buying and selling foreign currency.The foreign exchange market is open 24 hours, with the main trading centres in different parts of the world. Traders can therefore access the markets through the internet from anywhere and at any time. This also makes forex trading a very convenient venture for people who have day jobs, or other commitments.

Features of the foreign exchange market

The foreign exchange market is characterized by high liquidity. A lot of money changes hands fast and investors have quick and easy access to their money. The opening and closing of trades is instant, and it takes very little time to sign up and start trading. The 24-hour nature of the forex market makes all related services prompt and available round the clock.

With almost each country in the world having its own currency, the forex market lists all these currencies’ values in relation to each other. Online forex trading makes it possible to trade in any currency pair that you want as long as the rates are listed in the market. The profit opportunities are endless as the different values of all the currencies rise and fall against each other. The aim of every trader is to understand how the market is behaving in relation to his chosen currency pairs so that he can trade accordingly.

There are several factors that affect the performance of the forex markets. The factors are pegged on the macroeconomic climate in different countries. Factors that affect the economy of a country – like inflation, interest rates and trade balance – will have an impact on the value of that country’s currency in the foreign exchange market. Countries that are stable politically and economically tend to have strong currencies in the forex market while the reverse is true for unstable countries.

The U.S dollar is the most traded currency on the foreign exchange market. It is used as the base currency in many of the currency pairs traded in forex markets all over the world. Currencies of a given region tend to dominate in the forex markets in their regions. The Japanese Yen and Australian dollar dominate Asian markets; the British pound and Euro are commonly traded in London while the U.S dollar is the major currency in New York forex market.

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Price Action – The Foreign Exchange Traders Friend

They say a dog is a mans best friend. In the world of foreign exchange however, the traders best friend is price action. Like a faithful and loyal aid, price action barks loudly and often, warning its master of potential price trend changes. And just like a dog to a man, the more attention you lavish on price action and get to know it, the more grateful it is and the more information it gives up about the markets.

Here’s why you really should consider price action as your staunchest trading aid…

The Importance Of Price Action To Foreign Exchange Trading

Price Action Is THE Leading Indicator. Sometimes, as traders we can’t see the woods for the trees. There is much debate on which is THE best trading tool or indicator to use. Moving averages, Stochastic, MACD, Bollinger Bands and many others are commonly championed – and they certainly can be useful as part of a nicely balanced trading plan. However, THE definitive leading indicator has simply got to be price. Price action is the here and now – it does not care about what happened 5, 10 or 200 candlesticks ago. When we look at the current price candlestick, and weigh it up against the ghost of a pattern it’s forming on our charts – we get a far better picture of what price action is likely to do in the future. And after all, that’s what we need to know in order to make money!

3 Candlesticks Tell A Lot. It’s good to maintain simplicity with our foreign exchange trading. One simple tactic that can help you understand the likely future price action in a tighter way is to look at the last three price candlesticks on your chart. What are they telling you? How are they trending? Are they forming a microcosm of a trend or are they choppy and veiled in revealing their intensions? A classic example of how 3 price candlesticks tell a powerful tale is the 1-2-3 formation. Here, price makes a low (the first formation), then retraces up (the second formation) before forming another low that is higher than the first. This simple pattern gives us a lot of information. It tells us that price has failed to reach a new low – so we are seeing a dab of price exhaustion in the market towards the downtrend. While we would not trade on this alone, it should warn us to look out for a possible trend reversal. All that from 3 simple price candlesticks. Amazing.

The Price IS The Market. Trends don’t form easily. They don’t break easily either. This is precisely why foreign exchange traders believe in the motto, “the trend is your friend.” – this means, when we are able to analyse price action succinctly, we are able to pick out profitable market trends. Getting into the right trend, at the right entry point is a surefire way to succeed with your foreign exchange trading.

Everything Lags Price. A few foreign exchange traders believe that all indicators besides price are largely useless. This is because they all LAG price. While there are some leading indicators which emit signals before price action follows suit, these are often criticized as being too impotent in giving too many false whipsaw signals. Others, such as the moving average cross over are lagging signals, and traders who believe only in price analysis will argue that once MA has given a signal, the bulk of the price movement has already been made.

While it is always a good idea to trade with a small cache of useful indicators by your side, never forget about your truest buddy in the world of foreign exchange trading – that old dog, price action.

 

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3 Highly Potent FX Trading Indicators

There are a plethora of indicators within the world of forex trading – from the sublimely simple, to the astonishingly advanced, there’s a real pick and mix of tools to help every style of trader no matter their strategy preference. A few, however, are universal in that more traders use them than not. With this article, we’ll explore three must-have trading indicators that should adorn every trading station.

3 Of The Best FX Trading Indicators

Moving Averages. The reason these have been included is that they can be custom fit on your charts to unveil a lot of key price information. Slow or fast, exponential or simple – moving averages can be of use within every mood or persona that the market adopts. A moving average simply aggregates price action over a period of time, thereby allowing traders to be understand the underlying pulse of price action.

Simple moving averages are as their name suggests – they plot previous price action without any concern of price in the later vs earlier periods. In contrast, exponential moving averages give more weight to the more recent price action when they are plotted. The result is that they tend to be more responsive that simpler moving averages.

One of the most potent uses of the moving average is that they are very apt at trend spotting – and what is FX trading if not understanding and jumping aboard trends? Most FX traders when trying to trade using the moving averages, will plot two of them simultaneously against the price action. One will be a slower moving average and the other a faster one (eg 20 and 10 period moving average). The position of both moving averages in relation to the price should give you a clear indication of the current FX trend. So, in an uptrend, we would expect price action to mostly stay above the moving averages, and (using the above scenario) we would expect to see the 10 period moving average stay above the 20 period moving average. Were the 10 period moving average to crash downward below the 20, this could be an indication of a new downtrend forming. Price action by this point will probably already have dunked below both moving averages.

Bollinger Bands. The reason the Bollinger Bands are included as one of our top 3 FX indicators are simply due to their versatility. Strictly speaking, the Bollinger Bands are volatility indicators – and while they do a great job in this regard, FX traders can squeeze out so much more mileage out of them. The bands can help gauge trend direction, as well as identify periods of market consolidation or fierce breakouts. If that’s not enough for you, they can also be used in order to help with stop losses, take profit targets and as fluid resistance and support markers.

Stochastic – FX traders need to get a vibe for the momentum of a currency pair. How quickly is it chugging along? The Stochastic is one of the easiest indicators to read, to get a handle on market momentum. The indicator has two lines, and when they cross it signifies a possible trend change. When the indicator is snaking along above 80, there is a vibrant positive momentum. When this is running below 20, there is a strong negative momentum. Good for understanding where a trend is – and just as useful to identify possible overbought/oversold regions on the chart. Plot the stochastic today!

 

 

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5 Things You Need To Know About Forex Indicators

Savvy traders will always turn to their favourite forex indicators to get a feel for the markets. There are many indicators available out there, and they can often help provide key insights on forex trends, momentum, velocity and volume. In this article we’ll reveal the most important considerations that every trader needs to keep in mind when using indicators.

5 Things Every Trader Needs To Know About Forex Indicators

1. Different Courses For Different Horses. The reason that forex indicators come is such a vast array of shapes and sizes is that each addresses one of several types of market analyses. For example, moving averages can tell us the direction and strength of a trend, which is great when traders need to understand the general market direction. The stochastic and RSI are great tools for determining when a currency pair may be overbought, or oversold. By understanding the many different indicators, and how they may be applied to pick market behaviour and condition, traders can enter positions with more guile and precision.

2. Indicator COMBINATIONS Are What It’s About. An indicator by itself may be useful. And, an indicator signal, alone, can be an interesting development. However, for really potent trading, the trick is to combine several different indicators and wait for a confluence of signals and price action to lead you irresistibly into a position. Knowing the right indicators to combine is an important part of the overall forex trading gameplan.

3. Know The Difference Between Leading And Lagging Indicators. Different indicators can emit signals at different times. Lagging indicators, such as the moving average crossover, will spout a signal AFTER a new price trend has formed. This can be useful to traders who want to confirm that a trend has reversed – but in many cases the price will already have moved decisively before the signal is given. In contrast, a leading indicator will provide a signal in anticipation of a price move or reversal. This sounds ideal right? Get to know a trend reversal before it happens? True – only leading indicators are notorious in providing false signals. Lagging indicators by contrast are far more reliable. There’s no reason whatsoever why you cannot use both.

4. Less Is More In The World Of Forex Indicators. Simplicity is profitability. While employing a tight cache of forex indicators can be indispensable for the astute forex trader, there is that problem of “too much of a good thing”. Too many indicators can provide more problems than solutions for a trader – they can clutter the screen, with each new indicator adding incrementally less value to the analysis process while enhancing confusion. Too many indicators can also lead to mixed signals, which can be a real psychological barrier to successful trading.

5. Get To Know The Indicators You Feel Comfortable With. It’s always a good idea to try out many indicators as you learn about forex trading. Indicators are somewhat like bats when playing cricket – on a general level, they might look similar and have the same broad function…however just as cricketers will use a specific length and weight of willow for their batting, forex traders will have those unique key indicators that seem to work best for them. The more you trade with different indicator combinations, the faster you’ll discover the ones that suits you best.

 

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Distinguishing Between Good and Bad FX Price Signals

FX trading is an incredibly unique activity. There are a wide range of FX trading styles, and two different traders are liable to interpret the same chart in entirely different ways. One of the most important skills you can ever perfect as an FX trader is in distinguishing between good and bad price entry signals – we’ll look to make this more clear cut with this article.

Distinguishing Between Good & Bad FX Price Signals

Have A Sense Of Positioning Before Acting On Price Signals. Support and resistance levels trump most price signals. When areas of support and resistance have had a long and glorious reign over price action, not allowing it to pass it’s borders – it takes a brave trader to bet against that. For example, let’s say you get what appears to be a long entry signal according to your trading indicators. However, you notice, the long signal happens extremely close to a strong price resistance point. In this instance, it would be risky to go long, as the amount of pips you could bank before price reverses again is likely to be short.

Long Tails On Support/Resistance Areas Can Be Powerful FX Price Signals. Staying with support and resistance levels, one highly potent FX price signal is seeing a candlestick with a long tail right on a support or resistance area. So, when price is at resistance, a price candlestick with a long tail piercing resistance (but where the candlestick body remains below resistance) indicates that price has insufficient momentum to break this resistance. A sign to look for a suitable short entry position. The reverse is also true – where a price candle with a long tail piercing below support (but with the candlestick body still above) can be a sign to take a long position.

Patience In Price Action Analysis. A very important thing to keep in mind. Price action trading within FX only works when traders have the patience to wait for patterns to actually form. It’s very tempting to try and jump into a trade on anticipation of a price pattern forming, often to try and lock in what might appear to be a good price. However, sometimes price action might well veer of the anticipated course quite steeply, and the pattern you thought was about to be formed does not. Always wait for price action to play out – let price lead you into an FX position.

Sometimes Price Action Tells Us Nothing. When price action is choppy, it’s being very stroppy. You might see price action sometimes trading in a very tight and consolidated pattern. You can see this when you plot Bollinger Bands on your charts – the bands become narrow, and price is squeezed into them. This sort of situation is very difficult to trade. Similarly, sometimes price action might be forming a series of unclear candlesticks – a string of doji’s or candlesticks with wicks on either side of a candlestick, offering no real insight to the trader. In these instances, it’s simply not possible to decipher price action, and it is better to remain out of the market.

 

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7 Golden Price Action Rules For Better Forex Trading

Price action is the most crucial forex trading indicator in town. The countless cache of other forex indicators all use price information as their foundation. Consequently, understanding price action is no different from understanding forex trading itself. In this article, we tap into the 7 golden rules of price action trading.

7 Golden Price Action Rules For Better Forex Trading

1. Analyse Price Action Using Japanese Candlesticks. There are different ways of plotting price on your charts, such as lines, pins and candlesticks. Japanese candlesticks are a marvel for price action traders, as they are able to capture prevailing market sentiment.

2. Spend Time Familiarizing Yourself With Forex Patterns. One of the most reassuring facets of forex trading is familiarity – some price patterns repeat over and again, and understanding price action depends on your ability to recognize them. This can take a little time – get to learn each pattern emphatically, and train yourself to look out for them using real forex charts.

3. Learn To Read Naked Price Charts. Good forex trading typically involves the use of a tight clasp of indicators that are used in conjunction to enter or exit trades. However, there are many instances when taking a look at price action alone, without a clutter of additional indicators, can be helpful. Some traders use this technique when they reach a state of confusion with their trading – taking a few moments to analyze price action alone can provide simple guidance as to where it’s been and where it’s headed.

4. Appreciate The Price Pattern That The Market Is Offering. Markets might be doing numerous things with price action. Sometimes, the markets may be sweeping price euphorically to unprecedented lows, or highs. At other times, it may cage price in to a narrow consolidation range. Forex traders need to understand the underlying market mood, and use the right trading strategy accordingly.

5. Look Out For Long Tails On Price Bars. One of the most powerful yet discreet price action signals are long tails (also known as wicks). Sometimes they can be insightful signals, and other times they can mean nothing. It depends on where they are seen. When a long tail is seen on the TOP of a candlestick, this can be a powerful reversal signal following an uptrend. The basic idea is that the uptrend could well be running out of momentum. This will be all the more true if you see a cluster of candlesticks with long wicks protruding from the top – a more powerful sign of trend exhaustion. Finally, the longer the tail, the more powerful the sign of price exhaustion.

6. Let Price Confirm Your Suspicions Before Entering A Trade. Getting itchy fingers is a problem for many forex traders. They believe they see a pattern forming – and rush into a position before the pattern is allowed to play out. Good forex trading involves patience – no matter what you think you see – a head and shoulders, double top, 1-2-3, wedge (etc)… be patient and let price action itself lead you into a position.

7. False Price Breakouts Can Make Powerful Trading Opportunities. We know what breakout trading is – how about false breakout trading? A false breakout is when price feigns to go above a key resistance area, or below a key support one – only to fail. These false breakouts can make good trading opportunities – you simply have to trade with the status quo. So, when there is a candlestick with a long tail reaching below a key support area, but price ultimately is maintained above that support area, this is likely to be a failed breakout which can be traded.

 

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Secrets of Trading With Forex News Items

forex news

The majority of forex traders these days would not recommend fundamental analysis to you. According to these traders, you do not need to focus on forex news items because all their effects are visible through price action and rate fluctuations.

However, what they do not realise is that it is possible for a trader to pre-empt trends and fluctuations if he understand the reason why they happen. This is where studying forex news is so important.

Unfortunately, it is not easy to base your trades on the basis of which news items are released and how they are going to affect the market. The reason for this is that it requires an insurmountable amount of confidence and a deep understanding of the market.

In addition to this, there are many other things that you will need to do if you are planning to trade on the basis of forex news items. Consider the following.

Anticipate Forex News Items

Anticipation is the primary secret of trading on the basis of forex news items. It is not even difficult because most forex brokers provide their traders with economic calendars as a part of their trading platforms.

Economic calendars typically contain a yearly schedule of all major FX news items and even provide updates on the expected impact of particular releases. Therefore, anticipation of forex news items only involves the trader to predetermine how he is going to react to which situations.

Take Note of the Impact of News

While keeping a journal is important for all forex traders, it is especially important for a trader who is planning to rely on forex news items a lot. The reason for this is that the impact potential of news items is truly infinite.

It can only be mapped on the basis of experience. Therefore, when a trader keeps records of all his trades and which news items made them happen, he gains an understanding of how the market is affected by various news items.

Always Keep Expectations in Mind

Expectation is important in the market. If you look at your economic calendar you will see expectations next to the forex news item that is to be released next. These expectations are basically projections of what the news item’s content could be like.

However, these expectations have a huge impact on the forex market by themselves. Ideally, if you are using fundamentals to trade in the forex market then you need to trade in terms of how the market reacts to the news items so that you can be a step ahead of other traders.

Be Resilient

A forex trader has to be able to cope with uncertainty because the market will always have the capability to surprise. This is especially true for fundamental forex traders because forex rates become particularly volatile every time a forex news item is released.

Therefore, you should know that on some trades you will take a financial hit. The trick, however, is to know that you will make net profits and not get affected by small turnarounds.

 

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