The forex trading is generally done using fundamental analysis or technical analysis or combination of both. For short term trading (day trading, swing trading) technical analysis is the best. My trading style is to use below mentioned indicators -
1. Support and resistance levels - In Online forex trading support and resistance areas tell key areas from where the market direction generally reverses. The more number of times the market reverses from that point, the more stronger that area is. So, definitly if the resistance and support area is broken, the market continues going in that direction.
2. MACD - Moving Average Convergance & Divergance in online forex trading tells the momentem of the moving averages with respective to each other. When lets say that market is making higher highs, but MACD is not, that suggests that the market is losing its steam and may move in other direction.
3. Candlesticks - These are the units that indicate what markets may do next. As I mentioned in earlier post, there are books and books written on Candlesticks and its patterns.
4. Double bottom and double top - A variation ofsupport and resistance level. Generally when a market tests a support/resistance area twice, if it cannot break that area, it moves in the opposite direction. So generally when a double top/bottom are formed, its a good time to enter a trade.
Tuesday, October 16, 2007
Trading forex to advance your financial position
Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the .................
Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world’s financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.
Today’s traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency’s actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.
An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more
dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader’s investment decisions, and they will purchase or sell currency accordingly.
This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.
Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world’s financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.
Today’s traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency’s actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.
An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more
dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader’s investment decisions, and they will purchase or sell currency accordingly.
This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.
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