Using Market Indicators For Forex Trading

If you want to try to make some money by dealing in foreign currencies

, you clearly need to do a great deal of research. The basis for this research will be provided for you if you have opened a Forex account with a decent Forex broker.

A decent Forex broker should provide its account-holders with sufficient news and sufficient charting functions to make good financial judgments. Because the Forex market is active every second of every day, the news has to be up-to-date as well. And precise.

A Forex market trader endeavours to use market indicators to forecast the future trends of currency pairs - for instance, the UK pound against the US dollar. Market indicators could be good or bad news concerning your target countries.

They might be jobless or gross national product (GNP) figures. Other market indicators could be the threat of war or the rise in the price of oil. In fact, almost all political and economic information can influence the way a currency moves.

These items of news will have a short term or a long term affect on the trend of a currency and the longer term trends are depicted in graphs or charts as they are known as in financial circles. Charting software should be integrated in your Forex trading account system.

These charts can be utilized to trace almost any time span, so you can make a trace of how two currencies fared against each other over the last five years, five months, five weeks, five days or even five hours.

The best technique to make full use of these charts is to use them in combination with current affairs. That way, you will see that so-and-so bit of news had so-and-so effect on the market price of so-and-so currency. For instance, a steep rise in the price of crude oil will harm the dollar [USD], the pound [GBP] and the Euro [EURO], but it will benefit the currencies of oil-producing nations.

You can set triggers on your charting software so that you become aware of certain financial events. For instance, if you see that the USD is falling against the GBP, but you believe that a fall under 1GBP/2USD is not justified, you could set a trigger point to advise you when that level is reached, so that you can buy back in or sell or reverse whichever position you are holding.

There are a lot of market indicators and if you want to be a flourishing Forex market trader, you will have to learn how to utilize them. There are Stochastics, Fibonacci Retracements and dozens and dozens more.

The good thing about using a Forex broker's online software is that the raw data is updated without human intervention, so that when you call up a chart, you know that the data is current and that the market indicators are working as they should be.

The only problem, and it is a big problem, is that then you have to interpret that data in order to forecast the future trend of a currency pair. At the end of the day, it is your money and you cannot criticize the indicators, you can only blame your interpretation of them.

by: Owen Jones

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