Tag: how to trade forex properly

  • How to predict movement in the Forex market?

    How to predict movement in the Forex market?

    How to predict movement in the Forex market?
    It is possible to predict movement on the Forex market based on several factors.

    By Guy Avtalyon

    I know some of you will wonder if it is possible to predict movement in the forex market. We are all suspicious about any kind of predictions, so why wouldn’t we be when it comes to the forex? On the other hand, almost every successful forex trader will tell you that successful trading comes from the ability to predict the movement in the forex market. So they must know something or they have some secret ingredients or skills.

    I want to tell you that the ability to predict movement in forex isn’t something you can be born with. Actually, it is something you are building all your trading life. To create that complicated construction, you must understand the factors that influence a currency’s exchange rate. Of course, if you want to profit from forex trading.

    Well, why shouldn’t you?

    Millions of traders want to trade Forex because they understand it is the best market to trade. The potential of the online trading market is excellent.

    So I want to tell you more about the factors you should consider in trading forex. That could help you to predict movement in the Forex market in a way to have better chances for success.

    Predict movement in the Forex market

    One of these factors you have to pay attention to is economic growth. The central banks in a country with a strong economy will raise the interest rate to prevent inflation. Higher interest rates always drive the growth of the number of investors, which means the demand for domestic currency increases. 

    Another factor you should understand is geo-politics. You have to watch and notice any kind of disturbance in the political scene. I know you might think it’s too dull. Well, this is very important if you want to predict movement in the forex market because political changes can change the direction of the exchange rate. We saw this so many times in history. If you want to trade currencies successfully, you’ll need to follow political and economic news. 

    Speaking about interest rates, keep in mind that some currency’s value increases along with rising interest rates. This increased value is known as capital appreciation. That is exactly what gives you the opportunity to profit in trading forex. The currency rate is associated with interest rates. So pay attention to it. The data you gather could be a great help in predicting movements in the Forex market.

    Arguably one of the most important factors is recognizing if the currency is conditioned on the country’s capital or trade flow. Capital flow represents the amount of investment some country receives from international capital reservoirs. Trade flow represents income produced from trade. So, you’ll notice that some countries depend on capital flow, while others are very dependent on trade flows.

    The least important factors are mergers and acquisitions when we talk about predicting movements in the forex market. Still, mergers and acquisitions can show you near-term currency changes. Smart traders always pay a lot of attention to them.

    Sure ways to predict movement in the Forex market

    The power to predict movement in the forex market can differentiate a profitable trader from a loser. It’s essential to understand the factors that cause changes in the currency’s price value if you want to last in the forex market. Here is another set of factors that will help you predict any movement in the forex market and allow you to get an advantage in the trade.

    The Consumer Price Index, or CPI, is one of the reliable methods. This measure indicates when the prices of consumer goods are rising or falling. When CPI is above 100, you can be sure the inflation is on the scene. On the other hand, we can be talking about deflation when it is under 100, as the prices are falling. You can calculate CPI per formula

    CPI=(Ct/C0 )*100

    where Ct is the cost of a market basket at the current time, and C0 is the cost of a market basket at some point in the past with which it is compared.

    How does this influence forex trading?

    It’s quite simple. If the inflation rate is steady, you’re sure you can trade a specific currency pair. On the other hand, if the inflation rate is high, stay away, or you’ll end up in losses.

    Catastrophic natural disasters such as hurricanes, earthquakes, or floods ordinarily change a country’s currency and never in a favorable direction. The consequences of these events could cause a currency to depreciate. 

    Also, wars! They might have a calamitous result on the economy. I’m not talking about the damage to infrastructure. The currency value can be diminished, which is more important. It would help if you were updated on such an event to predict the movement in the Forex market. If you trade a currency pair that consists of the country’s currency in war, wait till the economy stabilizes.

    You must have information at your disposal to help you trade forex. No one is saying you should trade without risks involved, but you should calculate the risk. It is the key principle if you want to make a maximum profit. Forex traders are always updated on events that may change the currency pair’s rate. By knowing them, you’ll be able to strategize your trades better. You’ll have a clue when to enter or exit the position.

  • Can I get Rich by Trading Forex?

    Can I get Rich by Trading Forex?


    Some people really got rich by trading forex but they spent a lot of time and money to reach that level. Forex trading is a seductive but rocky path.

    By Guy Avtalyon

    Can I get rich by trading Forex? Yes, you can. Honestly, it’s possible but you have to learn a lot. When you first start learning something, you acquire information. As you acquire more and more information, your mind will sift through it and will organize it, and will only leave the most important information that pertains to you. And that becomes your knowledge. Then as you start acting on your knowledge, and start gaining experience on a subject, that knowledge turns into wisdom.

    I would like to emphasize this. In order to become successful,  it isn’t that you need to only be knowledgeable, but you also need to be wise, and wisdom is only acquired through action and experience.

    Listen to the wise people if you want to get rich by trading Forex

    But there is also a second point in this story. You can’t become a successful trader, no matter how much information you were gathering, and no matter how many books you read from “knowledgeable” experts if you are not ready to carefully listen to what wise people have to tell to you.

    So please, before you open up space in your mind to someone or something, make sure they are a wise person who is actually trading and making money in forex, instead of just giving you a bunch of useless theories. When you find such a person you will know that. You will feel like the guy who discovered the king’s tomb.

    Oh, yes, you will have one of those moments where you are staring at one of those optical illusions, staring at it for hours until KABOOM! It hits you “it’s a f***ing ship out to sea!”

    Until you get rich by trading Forex here are some tricks!

    Choose a Broker With Appropriate Trading Platform 

    You must know each broker’s policies and how it goes about making a market. Spending time researching the differences between brokers will be very helpful but choosing a reputable broker is of paramount importance.

    Define Your Goals, Methodology, and Style 

    It is vitally important, to have some idea of your goal and how you will get there. Hence, it is imperative to have clear goals in mind. After that ensure your trading method to be capable of achieving these goals. Each trading style has a different risk profile and each of them requires a certain attitude and approach to trade successfully. Whichever methodology you choose, be consistent, and be sure it is adaptive. Your system should follow the changing dynamics of a market.

    Choose Entry and Exit Time Frame 

    Some traders are disoriented by conflicting information that happens when looking at charts in different time frames. If you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize those two. If the weekly chart is sending you a buy signal, just be patient and wait for the confirmation from your daily chart. It should also give you buy signal In Forex trading timing is everything.

    Learn to Love Small Losses

    Think of your trading money like holiday money. Have the same attitude toward trading, once the holiday is over, your money is spent. This will mentally prepare you to take small losses. This is key to managing your risk. You will be much more successful by accepting small losses rather than constantly checking your balance.

    How to use Forex trading system  

    When knowing what to expect from your Forex trading system you must have the patience to wait for the price. It needs time to reach the levels that your system indicates for either the point of entry or exit. If your system point to entry at some level but the market never reaches it, then move on to the next opportunity. There will always be another trade. Sit on your hands until your system triggers an entry or exit point.

    Forex can change your life

    This is pretty much true but you must have realistic expectations. You can’t expect to invest $300 in your trading account and make $15,000 in each trade. That means being not – realistic. However, the Forex market sometimes can make a much bigger move than you expect. But it is not the rule, keep this in mind. It is better for you to be positively surprised than to lose everything. This is particularly true for Forex trading beginners.

    Build Positive Feedback Loops

    When you plan a trade with due diligence and execute it well, you create a positive feedback pattern. Success produces success, which grows confidence and you have a profitable trade. A positive feedback loop is formed as a result of a well-executed trade. But when you know that it comes in accordance with your trading plan the effect is more intense. Even if you get a small loss, you will be building a positive feedback loop. Think about the feedback loop as a tool and you’ll understand how important is to create this tool. That is the secret of how to get rich by trading Forex.

    Test Your Skills

    Open some free demo account and test. Submit trades in a virtual ambiance with virtual money before you start risking your own money. You should never ever trade a setup just because candles are moving. The aim is to be prepared and anticipate movements. You have to understand one rule: when a currency pair is moving fast, the reward to risk ratios are decreasing very fast. That means, there are more chances of the currency pair moving more pips before it makes a retracement. By jumping in a trade that is moving, the likelihood of a lower reward to risk ratio is high and the chances of a continued move without retracement are smaller.

    The best trading occurs when traders have both the mindset and trading mentality of a hunter when approaching the Forex market. If you coolly view and analyze what the conditions of the market are and then comparing that setup to the desired market environment, you are on the right path. If the market is offering sufficient odds of success and reward to risk ratios, then the trade plan is executed without any emotional disturbances.

    Stick a note on your computer that will remind you to take small losses often and quickly rather than wait for the big losses.
    What are your experiences? Share them with us or share this post with others.

    Last update: 10/07/20