Thursday, September 20, 2012

A Foreign Exchange Trading Education

If you are brand new to the forex market and are looking to get a foreign exchange trading education, you need to be prepared for a couple of things.
For one thing, if you have experience with stocks or derivatives, get used to the idea of not having a break. The forex market simply does not stop during the workday. So if you are used to punching out 4:00 pm when the final bell is rung, get ready to put in some overtime. The market is ongoing for 24 hours a day.
The other thing to be aware of is the fact that the foreign exchange market is much more news driven than any other market. If the Fed Chairman sneezes the wrong way, a currency can go up or down 100 pips.
But the one thing that I just love about the forex market is that its price movements are a lot more cyclical than other markets.
By this I mean, if you study price charts on currency pairs, you will begin to notice that there are price action patterns that can be used to predict future price movement. No other market seems to have such strong correlative patterns.
The wonderful thing too, is that since there are so many currency pairs to choose from, and the market is always open 24 hours a day, you are bound to find solid trades across the scope of the market irregardless of what time it is. This is perfect for those that have day jobs and don't have the ability to look at charts all day.

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