When it comes to making a living online, there is forex trading, and then there’s the rest. The forex market has a turnover of more than $3 trillion each day, that’s more than all the world’s equity markets combined. With the continued growth of global trade, the volume of currencies having to be traded can only rise dramatically upward.
Unlike the chaotic stock and commodities markets, the foreign exchange follows a rather more predictable pattern. Currency pairs move in so called trends, lasting days, weeks, or even months at a time. Identifying these trends and using easy mathematical tools to devise optimum exit and entry points is, while not simple, straightforward enough for a noob to grasp in a comparatively short time.
If a new trader focuses of one or two currency pairs, like the Euro/Dollar or the British Pound/Swiss Franc, then that trader can swiftly put up a powerful background in those pairs, better permitting him to make the absolute best trade calls.
The key tool for new traders is technical analysis, which concerns studying charts and employing some straightforward calculations to pinpoint the next few days most likely highpoints and lowpoints. The most important things to look out for in a currency pair is the resistance point, or the highest a given pair has gone within a given point frame before dropping in value , and the support point, which is a similar thing apart from in the other direction. Knowing these can help a day trader avoid getting involved on the wrong side of a so called breakout, which is the dramatic rise or fall of a currency pair’s worth when it ”breaks out’ ‘ of its support or resistance points.
The life of a forex trader involves doing an hour or so of technical review each day before opening his position, and after paying close attention to elementals, which is currency movements based on macroeconomic events. Fore example, its a good idea to keep the business stories channel on to get earliest possible alert that the central bank has just made a press release that might wipe out the trader’s positions if he didn’t reverse them fast!
Pete Gubbay is a seasoned Foreign exchange trader. He writes about foreign exchange trading often and maintains a question and answer style site dedicated to the subject called Forex Trading Q&A.On his site you will find answers to all of your forex currency trading questions.