Learning how to make trades on the foreign exchange market requires access to important information that will influence your trades. The more you learn about forex trading the better prepared you will be to make trades and implement specific trade strategies.
Of course there is a lot to learn about how to trade Forex, so before you start using any profitable trading strategies, there are also certain factors that all traders must know regardless of skill level. Trading forex is similar to a pre-flight checklist; you will need to make sure certain things are in order before you begin trading currencies.
Read more to learn about your forex pre-trade checklist.
Because the forex market is an around the clock market many new traders incorrectly assume that they can make lucrative trades at any time of the day or night. While it is true that the market is basically always open, there are four main forex markets—New York, London, Tokyo and Sydney—and they all have different trading times.
Knowing when each market operates can help you learn the best times to be active. Strategy is an important part of learning forex trading, and one major part of your strategy should include making trades during the right times. For all four trade markets, the early hours are often the most lucrative.
Another key component of learning forex trading is learning about the different currency pairs. Because all forex transactions include two different currencies you want to make sure that you choose your pairs wisely. You will be selling one currency and buying another during the same transaction, and maximizing your profits means carefully choosing these pairs.
Conversely you will also need to know the exchange rate of these pairs so that you know what a good trade is, and how to maximize your ability to make lucrative trades. When you learn about forex trading you will need to learn the best exchange rates so you get the most out of your transactions.
Since the main focus of the foreign exchange market is the currency it is important that you understand the predetermined abbreviations for all currencies. Because the currencies are not listed by their full name, it is important that you have knowledge of the abbreviations for your most frequently traded currencies.
Using forex tutorials and dummy trades will help you determine what currencies you will trade the most, so it is important to be able to easily identify the currency pairs in this fast-paced market.
When you set out to learn forex trading one of the most significant pieces of information you will need are the economic indicators. These indicators include information about different economic markets as well as other financial data released by different governmental agencies. This information will help guide you in your trades.
Additionally this information comes out regularly and you should know when economic indicators are released so that you can monitor the market in the days leading up to the release of this information. This will help you set up your trade strategy based on the speculation of what those indicators will reveal as well as what those indicators actually reveal.
Put these items at the top of your forex education list and you will be a savvy forex trader in no time. Now would be a good time to go over some Forex trading strategies so you know what to look for and how to take advantage of certain market conditions.