Good day guys it's me again, I have been trying to understand the forex market and I have finally seen that understanding the chart is vital but it's not the only thing you need, and am here to share that with you guys, I do know most of you guys are crypto traders, you should really check forex trading out on your free time.
Firstly, Forex is simply the buying and selling of one currency for another, in other words it involves exchange a currency for another with a certain rate that changes over time. Forex trading on the other hand is simply making profit if the difference between two economies, be it the American or European economy, in forex we compare their currency which in turn shows you the value of an economy, the example of the economies in forex will be written as Eur/Usd (this is also called a currency pair).
The other aspects of forex trading that doesn't involve much chat work are;
- The financial news of the two economies
- The correlation of one currency pair with another
- Your mindset
These three are the major problems of every trader, chat work are easy to learn but you see the last if the four is where the ball game lies. Every trader has a bias of the market (a bias is an expectation a trader has on a certain pair either a buy or a sell) which happens to be correct all the time, but your mindset wages a war and causes loss, I know many of you will disagree with the statement above, but please remember, the market buys and sells in a day just that one of these last for a longer period of time than the other. Instead of beating around the bush let's dive into explanation of the three.
Financial news of both economies
The financial news of both economies will help you ascertain which session will be longer, is it a buy or a sell because they both happen in a day, it helps you know which economy is growing and then you compare but economies in a currency pair and chart work and then you put in a trade. Many people wonder is it every financial news you listen, I will say no but I will urge you to because some affect the market largely than the others like Fed reserve affects largely, the bank of that economy and many others. They sometimes set the pattern for which the market will follow, reading them or listening to them is an added advantage.
The correlation between currency pairs
Correlation is very important, correlation simply means the relationship between this pair and another, some are positively correlated and others negatively correlated. It helps you in your bias by simply knowing which pair is positively correlated (what happens there, happens in your pair), especially the ones that take the large turn before your pair, once you ascertain the direction it's easier to put a successful trade.
The mindset
You will hear top traders always talking about psychology, this is what is all about your mindset towards trading, your growth strategy, risk to reward ratio, chart work analysis, your trading session and pairs to trade and many more. Your mind is responsible for your actions, many non-profitable traders know a lot about chart work but still they lose, it's simply because they have an issue with risk to reward ratio, or they simply became greedy or impatient this things affect your trading more than you think. In my next post I will dive in deeply on this.
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