How to Start Trading Forex for Beginners
Trading the forex market is not too complex as many beginners might think.
It only takes time to learn the market, test strategies, and stick to the ones that profit you.
To have a better understanding of the forex, commodities trading, stock market, and others, you don’t only read charts, you should learn both the technical and fundamental analysis.
What is Fundamental Analysis?
Fundamental analysis is the analysis of the financials of a certain instrument or asset.
It deals with the strength and weakness of a particular asset, that is the value of a particular currency.
In order to understand the rationale behind the price movement of a particular asset, fundamental research is a must.
You should learn how to do Fundamental research of a currency as a beginner in forex trading.
You can learn this by reading financial news, journals, online portals, and other financial publications.
For example, You’ll be able to know when the US government decides to print more dollars, cut interest rates, issue treasury bills, etc.
Understand the financial policies that are used to control cash in circulation and how it affects the value of the relative currency.
What is Technical Analysis?
Technical analysis is the use of a price chart and other predefined tools to measure the strength and weakness of price movement.
Technical analysis deals with market psychology and the behavior of traders towards an asset.
Some forex traders think that the technical analysis is all they needed since they are not committing their funds for the long term but it’s not.
There are tons of factors that influence the technical chart and analysis.
For example, the GDP, interest rate, monetary policy, and geographic events should be understood and related news should be followed.
Having said that, the technical analysis is a little bit complicated than the fundamentals.
This is because the perception of value from the technical analysis is arguable, and different analysts can come out with divergent opinions using the same technical inputs.
In technical research, for example, your analysis is dependent on a time frame, hence, a change in a time frame can result in a different perception of value or decision.
However, in technical analysis, you should analyze, select, and interpret the charts carefully.
The main idea is to know about the impact of future movements.
If you are a beginner, try to analyze both, and that will be effective for further development.
Stick to Learning Selected currency Pair
You can not have a good win to lose ratio in forex trading if you jump from one currency pair to another.
Each currency pair has some specificities.
Some pairs are traded more in Asia than in Europe, vice versa.
The most crucial part is to learn the movement of currency pairs and stick to one or two.
If you don’t have the proper understanding of it, the decision making will not be reliable and profitable.
You have to select a pair and test your strategy repeatedly trading it.
Once you’ve mastered the strategy with the currency pair, you can stick to it and improve on it.
You should also study trades between the two currency you choose to be trading their currencies against each other.
For example, GBP/USD, learn about how the economic policies of England affect the US and vice versa.
If you do not know about the currency’s price action along with the continuous movement of market conditions, you will not be able to make better decisions.
Currency trading is more like commodities trading. You must understand both the fundamental and technical strength and only then you can win more trades than you lose.
There are a lot of currency pairs that can be traded in the forex market.
Trading forex is now easier since you can trade it right on your smartphone
Most forex brokers have both android and iPhone apps to enable you to trade the market easily.
To succeed in the market, learning both the technical and fundamental analysis is a must.