Fundamental Analysis On Forex Trading

It has become imperative for every forex trader to learn how to predict the price trend and which method or software is the best.

When you do forex trading, it is very important to understand the difference between fundamental analysis and technical analysis. A quick explanation of the difference among the two types of analysis is: fundamental analysis focuses on money policy, government policy and economic indicators such as GDP, exports, imports etc within a business cycle framework while technical analysis focuses on price action and market behavior, especially on chart and technical indicators.

Needless to say both schools are equally disparaging about the other, and both believe their techniques are infinitely superior. But the reality is that it has become increasingly difficult to be a purist of either persuasion. Fundamentalists need to keep an eye on the various signals derived from the price action on charts, while few technicians can afford to completely ignore impending economic data, critical political decisions or the myriad of societal issues that influence prices.

Generally speaking, fundamental analysis can only judge which direction the market will move, and technical analysis can supply both direction and rough currency rate.

Keeping in mind that the financial underpinnings of any country, trading bloc or multinational industry takes into account many factors, including social, political and economic influences, staying on top of an extremely fluid fundamental picture can be challenging. Meanwhile, forecasting models are as numerous and varied as the traders and market buffs that create them. Different people can look at the exact same data and come up with two completely different conclusions about how the market will be influenced by it. At the end, some may make huge profit and some lose their money. You can not say fundamental analysis is easy.

Remember, fundamental analysis is a very effective way to forecast economic conditions, but not necessarily exact market prices. For example, when analyzing an economist's forecast of the upcoming GDP or employment report, you begin to get a fairly clear picture of the general health of the economy and the forces at work behind it. However, you'll need to come up with a precise method as to how best to translate this information into entry and exit points for a particular trading strategy.

Tip: If you are new to do forex trading and do not trade frequently, you can mainly use fundamental analysis for your trading.

Don't disturb yourself by information overload. Sometimes traders fall into this trap and are unable to pull the trigger on a trade. Normally, your first feel is the answer for you to do forex trading. At that time, you are sure which currency is strong and which country's economy is good. The more simple, the more useful.

However, trading a particular market without knowing a great deal about the exact nature of its underlying elements is unbelievable. You might get lucky and snare a few on occasion but it's not the best approach over the long haul.

For forex traders, the fundamentals are everything that makes a country tick. From interest rates and central bank policy to natural disasters, the fundamentals are a dynamic mix of distinct plans, erratic behaviors and unforeseen events. Therefore, it is very important to understand fundamental analysis and use them on forex trading.

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Forex Charts - Make Bigger Profits by Following These Key Points

Forex charts are a great, time efficient and proven way to make bigger profits but most traders don't use them correctly and here we will give you some key points to help you make bigger profits...

Let's look at some key points for more profitable technical analysis with forex charts.

If you look at any forex chart you will see big trends that can last for many months and trend following these can be very profitable and if you want to make money out of them you must understand this key fact:

Most big trends start and continue from breakouts to new highs and lows on the chart and you must go with these breaks - most traders don't. They want to wait for the pullback and of course it never comes and they are left behind. While it appears like you have missed the first part of the move, the odds of continuation are high so go with them.

Always be patient when using forex charts. You don't get rewarded for your efforts or how many times you trade but being right with your trading signal. I know traders who trade just a few times a month yet make triple digit gains - so wait for the right opportunities.

When you have a trend you want to hit always check price momentum is on your side and make sure that you use momentum indicators that show price acceleration in the direction you wish to trade. Two great ones, you can learn, in about 30 minutes are - the stochastic and RSI. These two combined will increase your odds of success by getting the odds more on your side.

Never believe anyone who tells you there is a mathematical formula for market movement - there isn't. If of course there was, we would all know the price in advance and there would be no market. So forget trying to predict and only trade the reality of price.

Its probabilities that you need to understand and like a successful poker player, you won't win every hand - but if you keep trading the odds, you will win long term. When using forex charts, the simpler your forex trading method the better, as simple systems tend to be very robust and have fewer elements to break, than complicated ones.

I have used a simple breakout method which uses trend lines, RSI and the stochastic and made money with it for over 20 years sure, it's simple but it works. Forex charts give you the reality of price before your eyes and you can spot areas of over valuation and under valuation. Humans create trends and they also (due to their emotions) push trends to far up or down in either direction.

You can of course ride trends - but you will also see big price spikes and history tells you they don't last long and taking trades contrary to the majority can be very profitable. Charting is an art not a science and you need to practice your art. The successful captain of a ship uses charts to navigate safely, but he also knows that use them wrongly and he will drown and it's a very similar situation in forex.

The Good News

You can learn forex charting in around 2 weeks and soon be piling up big profits in around 30 minutes a day spotting and hitting high odds trades and enjoying great profits. The good news is forex trading and using technical analysis is a learned skill and one you can master with a little practice.

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How To Read Forex Charts: 5 Things You Must Know...

Learning the basic skills in forex, such as how to read forex charts, is really important.

This is because once you have this vital skill under your belt, it will be a lot easier and quicker when the time comes for you to learn and practice an actual forex trading system.

By the time you finish this article, you'll learn how to read forex charts, as well as know the pitfalls that can occur when reading them, especially if you haven't traded forex before.

Firstly, let's revise the basics of a forex trading as this relates directly to how to reade forex charts.

Each currency pair is always quoted in the same way. For example, the EURUSD currency pair is always as EURUSD, with the EUR being the base currency, and the USD being the terms currency, not the other way round with the USD first. Therefore if the chart of the EURUSD shows that the current price is fluctuating around 1.2155, this means that 1 EURO will buy around 1.2155 US dollars.

And your trade size (face value) is the amount of base currency that you're trading. In this example, if you want to buy 100 000 EURUSD, you're buying 100 000 EUROs.

Now let's have a look at the 5 important steps on how to read a forex chart:

1. If you buy the currency pair, that is, you're long the position, realise that you're looking for the chart of that currency pair to go up, to make a profit on the trade. That is, you want the base currency to strengthen against the terms currency.

On the other hand if you sell the currency pair to short the position, then you're looking for the chart of that currency pair to go down, to make a profit. That is, you want the base currency to weaken against the terms currency.

Pretty simple so far.

2. Always check the time frame displayed. Many trading systems will use multiple time frames to determine the entry of a trade. For example, a system may use a 4 hour and a 30 minute chart to determine the overall trend of the currency pair by using indicators such as MACD, momentum, or support and resistance lines, and then a 5 minute chart to look for a rise from a temporary dip to determine the actual entry.

So ensure that the chart you're looking at has the correct time frame for your analysis. The best way to do this is to set up your charts with the correct time frames and indicators on them for the system you're trading, and to save and reuse this layout.

3. On most forex charts, it is the BID price rather than the ask price that's displayed on the chart. Remember that a price is always quoted with a bid and an ask (or offer). For example, the current price of EURUSD may be 1.2055 bid and 1.2058 ask (or offer). When you buy, you buy at the ask, which is the higher of the 2 prices in the spread, and when you sell, you sell at the bid, which is the lower of the two prices.

If you use the chart price to determine an entry or exit, realise that when you place an order to sell when the chart price is say 1.330, then this is the price that you'll sell at assuming no slippage.

If on the other hand, you place an order to buy when the chart price is the same price, then you'll actually buy at 1.3333. A forex system will often determine whether your orders will be placed simply according to the chart price or whether you need to add a buffer when buying or selling.

Also note that on many platforms, when you're placing stop orders (to buy if the price rises above a certain price, or sell when the price falls below a certain price) you can select either "stop if bid" or "stop if offered".

4. Realise that the times shown on the bottom of forex charts are set to the particular time zone that the forex provider's charts are set to, be it GMT, New York time, or other time zones.

It's handy to have a world clock available on your computer desktop in order to convert the different time zones. This is important when you're trading major economic announcements.

You'll need to convert the time of an announcement to your local time, and the chart time, so you'll know when the announcement is going to happen, and therefore when you need to trade.

5. Finally, check whether the times on your forex charts corresponds to when the candle opens or when the candle closes. Your charting software may be different to someone else's in this way.

The reason I mention this, is that if you need to trade major economic announcements, either by entering a trade based on the movements that happen after the announcement, or to exit a trade before the announcement in avoid getting stopped out during it, then you need to be precise (to the minute!) as these trades are performed according to what happens at the 1 minute immediately after the announcement, not the candle afterwards!

So there you have it.

You now have the 5 essential keys to how to properly read forex charts, which will help you to avoid the common mistakes which many forex beginners make when looking at charts, and which will speed up your progress when you're looking at forex charting packages, and forex trading systems that you want to trade!

What Does Discipline Mean in Forex Trading?

Everybody has a different definition for discipline.  Most people think that discipline means seriousness in doing something. This is true but discipline has a wider meaning when it comes to forex trading.

In forex trading, discipline means following your trading system rules exactly and precisely. Over 95% of forex traders lose, not because they do not have a good trading system or they have not learned the techniques. They lose because they fail to follow their trading system rules. They lose because they have no discipline. When you ask them about the techniques, indicators and systems they use, they explain very well, but when you ask them about their performance and results, you will see that they are not profitable yet.

• Do you trade without setting a proper Stoploss?


• Do you make your stop loss wider when it is about to be triggered by the market?


• Do you trade everyday, even when there is no strong trade setup?


• Do you insist to take a position whenever you sit at the computer?


• Do you try a different trading strategy, time frame, indicator and… everyday?


• Do you take a position when you hear that someone else has the same position or some people say that a currency goes up/down against another currency?


• Do you close your positions before they hit the stop loss or target?


• Do you take too much risk?


• Do you overtrade?


• Do you overanalyze?


• Do you take a position because you need to make money?

If the answer of any of the above questions is positive, it means lack of discipline is your problem and you will keep on losing as long as you do not change yourself and you don’t trade like a disciplined trader. And finally you will give up and you will lose the chance of making money through forex trading for the rest of your life.

Who is a disciplined trader?

A disciplined trader…

• Has a well-developed and at the same time simple and practical system.


• Trades only when there is a strong and perfect trade setup. He doesn’t mind not to trade for several days. He is like a hunter. He doesn’t waste his bullets when he knows that the prey is not close enough.


• Doesn’t look for new trading systems everyday, because he has come to this conclusion long time ago that his own trading system is the best for him and he has the best result with it. He also knows that there is no Holly Grail system and “grass is not greener on the other side”.


• Sets a proper stop loss for each of his positions and never makes his stop loss wider when it is about to be triggered by the market.


• Never lets a profitable and nice trade to be converted to a losing position because of maximizing his profit and breaking the others’ records. He knows where he will be out as soon as he takes a position.


• Never tries to make a huge profit by taking too much risk. He is always loyal to his Risk/Reward and money management rules.


• Never gets upset when the market hits his “reasonable stop loss”.


• Never regrets when he misses a strong movement just because the trade setup that was formed before the movement, did not look strong and perfect enough.


• Doesn’t get overconfident when he achieves several winning trades or even several winning days, weeks, months and years.


• Doesn’t lose his confidence when he has a losing position, day or even week or month.


• Doesn’t take a position just because the others have the same position or he has read or heard from somewhere that a currency will go up/down against another currency.


• Doesn’t take any position based on his thoughts. He trades based on the signals that he sees on the charts.


• Doesn’t overanalyze.


• Doesn’t overtrade.


• Doesn’t see beyond obvious. He just sees the signal which is in front of his eyes.


• Is not greedy.


• Has no fear.


• Doesn’t exaggerate about his success.


• Is humble and helps the novice traders to find the right way easier. He never misleads the other traders, specially the novice ones. He is aware of “Karma”.


• Is…


• Doesn’t…


• Is…


• Doesn’t…

Are you such a person and trader or you are trying to make money through forex trading while you have not reached to such a level of confidence, discipline and personality?

Forex trading is not about the techniques and trading systems only. 90% of forex trading is related to the things that I explained above and this is what Forexoma members learn to achieve. They not only learn the techniques, but they learn to become a disciplined trader within the shortest time. I help them not to make the mistakes that 95% losing traders do, the mistakes that I also made when I started.

I tell them how I was about to give up at least for a few times, but I gave it one more try and finally I reached to the level that was described above

Forex Books For Beginner.

Forex Books for Beginners

Here you will find the Forex e-books that provide the basic information on Forex trading. You can learn basic concepts of the Forex market, the technical and fundamental analysis. While all these e-books are recommended for every new Forex trader, they won't be very useful to the very experienced traders.

Almost all Forex e-books are in .pdf format. You'll need Adobe Acrobat Readerto open these e-books. Some of the e-books (those that are in parts) are zipped.

If you are the copyright owner of any of these e-books and don't want me to share them, please, contact me and I will gladly remove them.

Candlesticks For Support And Resistance — The basics of trading with candlesticks charts by John H. Forman.

Online Trading Courses — Course #1 lesson #1 by Jake Bernstein.

Commodity Futures Trading for Beginners — by Bruce Babcock.

Hidden Divergence — by Barbara Star, Ph.D.

Peaks and Troughs — by Martin J. Pring.

Reverse Divergences And Momentum — by Martin J. Pring.

Strategy:10 — Low-risk, high-return forex trading by W. R. Booker & Co.

The NYSE Tick Index And Candlesticks — by Tim Ord.

Trend Determination — A quick, accurate and effective methodology by John Hayden.

The Original Turtle Trading Rules — by OrignalTurtles.org.

Introduction to Forex — by 1st Forex Trading Academy. This trading course intends to provide to all of the students analytical tools on the trading system and methodologies. In this respect, the purpose of the course is to provide an overview of the many strategies that are being used in Forex market and to discuss the steps and tools that are needed in order to use these strategies successfully.

— by Scott Owens. A small e-book covering the basic and the main problems of Forex trading.

— by Royal Forex.

Forex. On-Line Manual for Successful Trading — an introduction into every aspect of the Forex trading including detailed descriptions of the technical and fundamental analysis techniques, by unknown author.

18 Trading Champions Share Their Keys to Top Trading Profits — as the name suggests, the book shares the secrets of the 18 prominent traders with the Forex beginners, by FWN.

The Way to Trade Forex — a 1st chapter of the book that will show you not only Forex basics but also some unusual techniques and strategies that can work for the newbie traders, by Jay Lakhani.

The Truth About Fibonacci Trading — the basic facts and information about Fibonacci levels and their application to the Forex trading, by Bill Poulos.

Quick Guide to Forex Trading — a 2008 edition of the Forex guide for the beginners and private traders.

Chart Patterns and Technical Indicators — an explanation of the most popular chart patterns and some technical indicators, by unknown author.