Fores Trading Simplified: A Simple Profitable Approach to Trading Forex

Trade 1 Hour a Week to 4 Hours a Day

Neumeyer Tony

• Publisher: Walking Crow
• Year: 2015
• Edition: 1
• eBook ISBN:
  9780993864858
• Topic: Business
• Subtopic: Financial Accounting
• Index: Business

How to Determine the Type of Trader You Should Be

Even if you knew all there is to know about Forex and how trade with it, you need to step back and look at the bigger picture. The Forex market is unlike anything you may have seen or worked with before. It has a way of humbling even the most successful people in other areas. I have seen the smartest, most successful people enter Forex trading and lose. They thought that their past success and natural talent would carry through to Forex. However, there are some keys to being profitable that even they will often miss. This makes it important for you to think about how you want to approach the market.

There is more to Forex than meets the eye, and the only way you are ever going to be successful is by choosing an effective trading style. What most traders do not realize is it is one of the most important factors and is necessary if you wish to survive in the market. Your trading style needs to match your personality and your goals.

Finding a Trading Style that Fits Your Personality

Many traders ask professionals for advice about the best ways to trade in the Forex market. The question implies there is a right way and a wrong way to work the market. However, you must realize there is no easy answer to this question or in other words, there is no right or wrong answer.

The Forex market with its unique trading characteristics has something to offer for everyone. Various trading styles can be adopted, but each of them has their own approach, whether fundamental or technical. I like to trade over days or weeks, attempting to catch the bigger directional moves, while a friend of mine has an automated system that literally will be in and out of a trade in seconds, capturing the smallest of moves. But he will do this a hundred times a day if the situation is right.

So, when deciding which style suits you the most in terms of Forex, you need to consider your own individual circumstances and personality.

Lifestyle Considerations

Before you make a decision about a particular trading style and an approach that works for you, it would be wise to take some time and put some serious thought into it. You need to consider many factors, including the resources available to support your trading. When dealing with financial markets, there are two primary resources people can never have enough of: money and time. It is up to you to decide how much of each you are willing to invest in Forex to reach your trading goals.

If you decide to be a full-time trader, you will have more time on your hands. This time can be spent wisely and can be devoted to market research and analysis to improve your chances for success. Since the Forex market is operational around the clock, you will at the same time need to be careful about the sessions you are choosing to trade in.

Even though the market is operational 24hours,, 5 days a week, it is not necessarily going to be a good thing and neither does it mean it is always going to be a good time for you to trade. On the other hand, if you already have a full-time job, you can adjust the plan you use to trade to suit that fact.

While you are at work, it is likely your employer will not appreciate the fact you are studying economic charts instead of concentrating on work. In this case, you will have to use whatever free time you have to catch up on market reports. But you have to be realistic about the time you are setting aside for your trading endeavors. I am continually listening to quality economic information so it’s really just part of my lifestyle and it doesn’t take extra time to do it. At the same time, it is also important to keep in mind that you will have various other personal circumstances and family obligations to deal with.

Taking Out Time for Market Analysis

It goes without saying that there are a lot of news and data that flow through the Forex and financial markets. It is true that it can be overwhelming and can make your job more difficult. The real question you need to be asking yourself is how can you keep up with all this information and also, whether or not this information is important to you given your trading style. If you are a 100% technical short-term trader, you may not be concerned about world macro-data. You may only need to know when the news events take place.

So the answer to this problem is quite simple: you need to focus on developing an effective daily or weekly routine for market analysis given your trading plan and style. Due to the online currency brokerages, this will be a cinch, as you will have access to any and all information you require. If you are trading daily, your routine will likely focus on aspects like:

• Overnight developments in the Forex market
• Current geopolitical themes and events
• Technical analysis of major currency pairs through multiple-time-frames
• Major market movements over a period of 24 hours along with updates and the stories behind them
• Market events and data releases
• The overall trend of the pairs you are trading

Fundamental vs. Technical Analysis

Before you go any further, you should ask yourself, on what basis will you be making trading decisions? You can either make decisions based on technical or on fundamental analysis. Each technique has its pros and cons, but you will have to decide which works best for you. Personally, because I trade with a longer term in mind, I use some technical aspects of the market flow to enter my trade and an overall fundamental macro view to determine the direction of the trade I will take.

Fundamental analysis focuses on a broad grouping of information and news, which in turn reflect the political and macroeconomic fortunes of different countries whose currencies you plan to trade with. Whenever you hear someone talking about the fundamentals of a currency, that individual is actually referring to the economic fundamentals. Essentially, economic fundamentals are primarily based on the following factors:

• Monetary policies
• Economic data reports
• International trade and investment flows
• Interest rate levels
• Government policies in general

Whereas, on the other hand, technical analysis is a term used to describe the form of marketing analysis, which mostly only involves trend line and chart analysis along with the mathematical and statistical studies of price behaviors. This can include factors like moving or momentum averages.

It is highly unlikely for you to come across a trader who does not rely on some form of technical analysis to make trading decisions. If you have been active in other financial markets as a trader, there is a pretty good chance you have used technical analysis.

Regardless of the technique you use, followers of each discipline, whether fundamental or technical, continuously debate which approach works best. Instead of taking a side, you should try a blend of the two disciplines, instead of relying on just one aspect.

Based on what experienced traders say, it has been noted that factors like market sentiment and interest rates directly impact the bigger picture. But then again, currencies rarely move in straight lines, meaning there are plenty of different short-term fluctuations for you to capitalize on. What’s more interesting is that some of them are quite substantial, to say the least.

The Three Primary Trading Styles to Consider

After giving some thought to the resources and time you are willing to invest to currency trading along with the approach you think is best, you need to decide on a particular trading style as well. But it is even more important for the trading style to fit the choices you have made previously.

Considering the size of the Forex market, there are various different market approaches and trading styles to choose from. Surprisingly, there are as many market approaches and trading styles as the ...

Table of contents

• Cover
• Title
• Copyright
• Table of Contents
• Introduction
• What You Should Know About Forex
• Why Should You Consider Forex in the First Place?
• Trading with Forex 101
• How to Determine the Type of Trader You Should Be
• Developing a Trading Plan
• Starting with a Practice Account
• Monitoring Markets While Making Trades
• The Importance of Evaluating Your Trading Outcome
• My Trading Plan
• Conclusion