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This Forex Trading PDF is written in such a way that even complete beginners can understand it and learn from it. In other words, we have read tons of Forex books, opened and closed thousands of trades; have filtered out? all the needed basics for beginner traders, and simplified them. So all you have to do is to take this FREE knowledge and start your online currency trading journey! TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits?
The best times for trading Currencies online? Learn how to read charts? Tips and warnings when using leverage? Learn whats the difference between Fundamental and Technical Analysis? Information is gold and we believe the more you have, the more you should share.
The economic and political institutions of these nations are generally long established and pre- dictable compared to other nations. Too much US Dollar exposure can lead to all your trades heading in the same direc- tion, a big problem if that direction is against you. THE "EXOTIC" currency pairs are less traded and so much more costly to buy or sell. Leverage in Forex trading is all about entering borrowed capital into transactions.
The money is borrowed from a broker who acts like a bank that fronts you some cash to invest, which in this case is to buy currencies. This shows that the higher your leverage, the higher your chance of a better ROI. The stop loss order lets your broker know to sell a currency when it hits a certain set price. These stops work around the clock in the forex market, therefore, protecting your position when you are logged out of the system.
In addition, the strategic stop caps the losses while also protecting the profits. While the Forex market is open 24 hours a day, five days a week, trading is not always active during this entire time.
So it is essential that you know the crucial hours and days of forex trading when traders are the most active. As a result, there are three active and in the afternoon overlaps with main forex trading sessions you should the opening of the New York or American be aware of; the Tokyo or Asian session, session, so there can be good opportuni- the London or Eurpoean session and fi- ties to trade forex and make a profit.
Seasoned traders considered 10am EST The busiest times are when these ses- to be the best time to trade forex markets sions overlap, for example, in the early as during this time, traders in London and hours of the morning in London, the trad- Europe are preparing to close their positions ing session in Tokyo is just winding down.
and traders are getting ready to make a European traders are getting to their move in the American session. As the focus desks and analyse and digest information shifts from Europe to the US, this often cre- from the Asian trading session, so early ates big swings in currency prices, opening 6am GMT is a great time to make trades up opportunities to profit.
These days generally show the biggest movements in currencies as major data releases relat- ed to the economy are usually released on these days. Fridays are busy as well, but only until 12am. During the second half of Friday, movements can often be unpredictable since major banks, hedge funds and financial institutions will close some of their positions for safety reasons over the weekend. Share now 🙅🏻 When NOT to Trade Forex?
Also, novice traders should be very careful with the Asion sessions. Let's look at the three most popular types of forex charts: line chart, bar chart, and candlestick chart. It is created by simply connecting the data points depicting the closing prices of certain periods with a line. Therefore, they can track its closing prices accurately.
They are also called the OHLC charts in reference to the Open, High, Low and Close values of the currency under consider- ation. These charts are similar to bar charts only that they present the price information in an aesthetically pleasing graphic format.
It also con- centrates more on the opening and closing prices of the trading period. Even if you don't have time to stare at charts all day long, you can spot great trading opportu- nities by simply viewing the news and economic calendar on a daily basis.
In other words, by performing fundamental analysis. Basically, all fundamentals are indicators of where investors intend to put their money and which currencies will be influenced as a result. All the drivers are divided in 4 major categories: central banks, state economics, political stabili- ty and natural disasters.
Politics Economics Central Banks Natural Disasters 👉 Public Statements 👉 GDP, inflation, debt 👉 Finance Circulation 👉 Hurricanes 👉 Change of Officials 👉 Sales amounts 👉 👉 Stability of governments 👉 Interest from investors 👉 Mandatory Reserve Funds 👉👉 Earthquakes Interest Rates Floods 💸 In the chart below you can see how the British Pound dropped because of the Brexit related events.
This was a great opportunity to make money shorting betting that it would decline the British Pound. ative for the associated currency since the price level is relatively higher than Since people possess skills, knowledge and inflation in other countries, diluting its experience, this human capital can be used value. Therefore, employment data ed, where a lower rate of inflation translates releases have a substantial effect on ex- to an improvement in purchasing power.
change rates. of that currency. unemployment rate should act to depress A high inflation rate discourages investment, the currency in question. reduces the purchasing power of consum- ers and makes planning for the future more The most important employment data re- difficult. lease in foreign exchange markets is the US Non-Farm Payroll figures. Some other Conversely, a low and stable inflation rate important data releases are the unemploy- encourages investment, increases the pur- ment rate, participation rate and other labour chasing power of consumers and business- market statistics, all of which have a moder- es can plan for the future more easily.
ate to high impact on exchange rates. Share now 3 Trade balance 4 Quantitative easing Trade with other countries is a major part Quantitative easing is an unconventional of most economies and therefore the trade monetary policy tool that is used to expand a balance can affect the value of a currency. goods and services, this will increase the demand for that currency and hence Money supply and inflation are linked, where its price.
However, if an economy in- a higher money supply should translate into creases its imports over time, this in- higher inflation and lower purchasing pow- creases the selling pressure on that er. The USA, Eurozone, Japan and the UK currency and it should depreciate over have all engaged in quantitative easing, with time. Also, the timing of their quantitative easing The trade balance is simply the ratio of programs has differed. If exports are higher than imports, then the country is said to have a trade surplus - in- cies to make trades on the forex market.
geared up for more quantitative easing. Also, the US Federal Reserve has recently indicated that further quantitative easing As with other indicators, trade balance may be necessary.
If this materializes, then data is usually released monthly and has it would be a good time to short a currency a moderate effect on exchange rates. A pair such as USD-ZAR or USD-MYR, since better than anticipated trade balance could South Africa and Malaysia are two fast-grow- be viewed positively for the currency and ing economies that have not needed to result in appreciation whereas a worse than implement quantitative easing.
expected trade balance will have the oppo- site effect. Share now 5 Country politics 6 Interest rates The political situation of a country can have a Interest rates are the most important tool significant effect on its economy. A new presi- central banks have and they are used to in- dent or prime minister might make radical fluence lending and savings and borrowing or changes to the economy. example than Donald Trump in the US, who has been increasing protectionist measures A higher interest rate incentivizes investment by raising tariffs against other countries and and saving, since people will get more interest introducing more obstacles for trade.
on their deposits and receive more in interest payments when borrowing to others. If people do er to borrow money for that new car or house not feel like their money is safe in a coun- someone has always wanted. try, they will sell that currency and seek a safe haven in a different currency. For instance, China has a one hundred are 2 percent while in Germany they are 5 year plan in place as it is a communist state, percent. People with savings in the bank whereas many Western countries change would move their money into German their leaders every four or five years.
banks to get a higher rate of interest, in effect, selling their Pounds and buying The relative instability could have an adverse euros. Therefore, changes in the interest effect on the economy, as problems from rate are high impact events for exchange the last administration are addressed but a rates.
made regularly by the major central banks and if you think the interest rate will be lower or higher than expected, then you can trade that currency and take advantage of the vola- tility following these announcements. The support refers to the level where the price rarely falls below before turning around, and the number of buyers exceeds that of sellers hence causing the price to rise.
On the other hand, the resistance is the level where price rarely exceeds, and the number of sellers exceeds that of buys hence lowering the price down. In both cases, the price stops and turns around. It is also called Shooting Star, Hanging Man and Gammer. You may remember that Pinnochio's nose grew long when he was lying. The same happens with this strategy: when the wick is longer than the body, this tells us that the market is deceiving us and that we should trade the opposite way.
A long wich indicated strong selling pressure; a long tail suggest intense buying power. The trade is planned on a 5-minute chart and is signaled when two bearish candles form fol- lowing a test of resistance. How to protfit? Choose an asset and watch the market until you see the first red bar. Then wait for a second red bar.
If the second red bar closes lower than the first red bar, then it's a jackpot. Usually, what happens is that the third bar will go even lower than the second bar. This is the point where you should open a short position. If you are skilled in charting currencies, also known as technical analysis, then you are able to frequently predict the future movement of a currency pair or the development of price action with accuracy.
One of the things traders look for is the trend of an asset, where it can be trending upwards, downwards or sideways. An upward trend is when the currency pair is increasing and is characterised by higher highs and higher lows. A currency in an upward trend will display a peak, then falling to a low and dis- playing a trough, then go on to establish a higher peak and fall to a higher low, and so on. By tim- ing your trade to buy after a peak and when the currency is establishing a new low that is higher than the previous one, you can profit from the uptrend.
A downward trend is when the currency pair is decreasing and is characterised by lower highs and lower lows. A currency in a downward trend will make a low and display a trough, rise to a high, then go on to establish a lower low and rise to a lower low, and so on. By timing your trade to sell after a high and when the currency is establishing a new high that is low- er than the previous one, you can profit from the downtrend. Peaks and troughs still occur but there is no discernible pattern such as higher highs, higher lows or lower highs and lower lows.
If you are new to forex, it is best to avoid hori- zontal trends altogether as it is uncertain which direction the currency will eventually break out. By trading with the trend, you are going with the flow of the market and allowing the market to work for you.
So when analysing a currency pair, look for higher highs and higher lows to find an uptrend. Look for where the next higher low could be and buy in this region. Alternatively, to find a downtrend, look for lower highs and lower lows.
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all the needed basics for beginner traders, and simplified them. So all you have to do is to take this FREE knowledge and start your online currency trading journey! TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits?
The best times for trading Currencies online? Learn how to read charts? Tips and warnings when using leverage? Learn whats the difference between Fundamental and Technical Analysis? Information is gold and we believe the more you have, the more you should share. That is why the only thing we ask you to do if you like what you have read is to share this PDF book with your friends and family. If it helped you, it can help them as well. Download this FREE Forex Trading pdf. Read right away or while drinking your morning coffee.
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