Learning forex trading should not be difficult. With decent understanding of money management rules and a good trading strategy, you should be ready for conquering the forex markets.
You should always try to understand the big picture. You should start each trading session by looking at the daily charts. After looking at the daily charts zoom into 4hr, 1hr, 30min, 15 min etc charts. Forex trading is about interpreting the past price action as well as about interpreting the future price action.
You need to know whether the market is ranging or trending before each trade. You should try to know any long term patterns that have developed by looking at the charts. By taking a general look at the different charts you will develop a feel of how the forex markets are behaving in the short as well as the long term.
Figuring out the general direction of the currency markets is easy. Candlestick analysis and moving averages are a good way to identify long term patterns and reversals.
Bollinger bands applied to 4hr charts can help you to identify the daily trading range. A daily trading range tells you where majority of price action is expected to happen. Any moves outside the daily trading range can be viewed as short term abnormalities and ignored.
You need to do some scenario planning for each day, once you have a general overview of the market for that day. You should know what fundamental news is scheduled to be released for that day and how the markets are expected to react.
Understanding the big picture does not mean knowing the whole picture. You should only focus on your favorite pairs. It takes a longtime and effort to understand a currencys behavior, how it reacts to things like oil prices, interest rates etc. So concentrate only on a few pairs in forex trading.
Keep a daily trading journal. Make notes in the trading journal for each trade. Start each entry by looking at the general direction of the markets for that day. What you expect how the markets are going to react to different fundamental news that is expected to be released that day? What should be your entry and exit for the trade? How many pips you are expecting for that trade? How long the trade should last?
After each trade try to analyze what went wrong and how to avoid it in the future! In case of a winning trade, analyze how many more pips you could have made and how to tweak your strategy for better results in the future trades.
Keep these general tips in mind while you learn forex trading. Never ever trade without putting stop losses! Practice on the demo account for at least three months before starting live trading with your real money.
You should always try to understand the big picture. You should start each trading session by looking at the daily charts. After looking at the daily charts zoom into 4hr, 1hr, 30min, 15 min etc charts. Forex trading is about interpreting the past price action as well as about interpreting the future price action.
You need to know whether the market is ranging or trending before each trade. You should try to know any long term patterns that have developed by looking at the charts. By taking a general look at the different charts you will develop a feel of how the forex markets are behaving in the short as well as the long term.
Figuring out the general direction of the currency markets is easy. Candlestick analysis and moving averages are a good way to identify long term patterns and reversals.
Bollinger bands applied to 4hr charts can help you to identify the daily trading range. A daily trading range tells you where majority of price action is expected to happen. Any moves outside the daily trading range can be viewed as short term abnormalities and ignored.
You need to do some scenario planning for each day, once you have a general overview of the market for that day. You should know what fundamental news is scheduled to be released for that day and how the markets are expected to react.
Understanding the big picture does not mean knowing the whole picture. You should only focus on your favorite pairs. It takes a longtime and effort to understand a currencys behavior, how it reacts to things like oil prices, interest rates etc. So concentrate only on a few pairs in forex trading.
Keep a daily trading journal. Make notes in the trading journal for each trade. Start each entry by looking at the general direction of the markets for that day. What you expect how the markets are going to react to different fundamental news that is expected to be released that day? What should be your entry and exit for the trade? How many pips you are expecting for that trade? How long the trade should last?
After each trade try to analyze what went wrong and how to avoid it in the future! In case of a winning trade, analyze how many more pips you could have made and how to tweak your strategy for better results in the future trades.
Keep these general tips in mind while you learn forex trading. Never ever trade without putting stop losses! Practice on the demo account for at least three months before starting live trading with your real money.
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate.
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