subject: Learn Forex Trading And Specialise To Succeed [print this page] Learn Forex Trading And Specialise To Succeed
You should learn forex trading differently from most other traders if you are to succeed in this ever-changing market.
Most new traders jump into this business without learning how to trade forex properly. How can they then expect to spot a trading opportunity that carries little or no risk?
To start with, they fail to see that it is actually two subjects. "Forex trading" is a deceptively simple term, but consider for a moment exactly what those two words mean.
"Forex" is essentially currency movements, and these are sensitive to speculation, breaking economic and political news, trade figures, industrial production, crop yields, unemployment statistics, government borrowing and even geological surveys and weather reports. All the elements that go into weighing one currency against another.
"Trading" governs any market where buyers are looking out for the lowest price and sellers are holding out for the highest. It's affected by all the irrational behaviour that markets of all kinds have been subject to since markets began.
And each of these two concepts, "forex" and "trading", have their own rules, their own glossary, their own peculiarities and idiosyncrasies, and failure to pay due respect to any of these can lead to failure.
All this sounds quite intimidating, but in fact once you realise this important distinction then everything else makes sense. Let the newbies to forex fall over themselves in their haste to get rich quick, and go broke in the process. What you, as an astute trader, have to do is to study each of these terms and accept that you'll probably be learning about them for the rest of your life.
Learn forex trading thoroughly - how it came about in the first place, its history, the major influences on the value of currencies, the role of speculators and investors, and how it's affected by events going on in the outside world.
Study the charts, and if you can then align them with what had been happening at the time in the various fields that I've mentioned. See how, for example, industrial production data can affect the strength or weakness of a particular currency.
But don't overstretch yourself. Select just two or three currency pairings to specialise in, and study past charts. Check what was happening that might have caused sudden movements in price. Follow your chosen forex pairings diligently, so you come to be an authority.
The "trading" part of the duo is a separate subject. Almost anything can be traded, and the same rules of trading apply. Scarcity increases the price, a surplus reduces it. A sudden increase in price is usually followed by a fall, and vice versa.
Study other markets, such as housing or the stock market, or foreign exchange futures, to learn as much as you can about trading as a subject in its own right. Then apply that to what you know about forex.
Putting the two together, you can learn forex trading thoroughly and give yourself the right mindset to become a successful trader within a few months.
