Forex Trading for Beginners

When starting out in forex, there are a few factors that are highly important for you to be aware of. Let’s take a look at what some of these factors are.

 

Timing the Market

The markets have times where it is more volatile, and volatility isn’t something to be scared of, it simply means there are more movements and traders need movement to make money. A slow and steady market isn’t really a great trader’s market.

The times where markets are most active is when they are being traded by the most volume, which generally relates to their geographic focus. The ASX is most active when USA starts the trading day, the FTSE is most active in the London session and the DOW is most active in the US session, particularly around the open time of these markets.

Similar is true for forex markets, when the business world starts their day, that forex market becomes more actively traded and more volatile.

High impact news announcements also create volatility in the markets, one thing to note is the news announcements can be unpredictable and perhaps more volatile than expected at times.

Choosing a certain time to trade with consistency can help traders understand that market at that time, giving a better insight into what might happen to future price.

 

Profit from Trading

The main goal of traders is generally to earn a profit. Keeping losses at bay is critical, so using a stop loss and understanding your risk management is key criteria to making a profit long term. Being able to cut a trade is important if the market shifts, rather than holding onto a losing trade or even adding to it.

It is better to not make a trade than to make a loss, so sometimes being patient will effectively earn you money. It is better to break even than to make a loss, but of course, it is best to make a profit overall.

 

Right Direction Brings Profit

Using a larger timeframe can be a massive help in seeing the big picture when it comes to the next big pricing move. If you can understand where a market is likely to go longer term, it can help to determine a bias for direction (buys or sells) on smaller timeframes. Getting into a trade that has longer term potential means that if you choose to simply hold the trade and move your stop loss to break even, there’s analysis that says it could keep going the right way.

 

Using Timing and Direction to Profit

Bringing it all together, entering the market at the right time in the right direction (price going up or down), means earning a profit.

Even if the timing is a little off, and you can hold a trade through some drawdown, it can still profit provided the end result is in the right direction.

Up or down, buy or sell, which will you choose?

Open your <InvestorHubFx account> now.