That, therefore, calls for a deep understanding of the dynamics and mechanics of the foreign exchange market, including the tools, factors, platforms, and strategies for trading currencies for consistent profitability.

To become a consistently profitable trader, many tables must be turned. Just like any profession, trading is an occupation that demands dedication and determination on the side of the trader. So don't turn trading into gambling.

Learn it properly! Forex trading falls under the umbrella of financial market analysis which is traditionally practiced by trained finance professionals and economists who learn about market analysis in their disciplines coupled with much professional experience. So, to be a professional forex trader, one has to be thoroughly trained formally or informally and exposed to the financial world and its dynamics.

One also has to dedicate a good amount of years, just like any other occupation around the globe. On average, it takes 5 years for doctors, 4 years for engineers, 3 years for lawyers, 3 years for economists, and 3 years for accountants to train professionally. It should also take similar, if not more, years to prepare a professional forex trader.

It takes many years to train a consistently profitable trader because forex trading is arguably the most lucrative among all professions. Traders have freedom time freedom, locational freedom, and financial freedom , not to mention that they are accountable to no one.

The forex market is also the largest in the world, with a daily trading volume of over 5 trillion dollars, of which the profits a single trader can make are only limited by the funds available in their account; so much that making 1 billion dollars in a single day is possible.

Below is a detailed 5 step guide to becoming a consistently profitable trader. This list has been made prior research from several explanations of professional traders worldwide, including George Solos , Mark Douglas, and Paul Tudor Jones. Other references have been obtained from famous traders like the Inner Cycle Trader , Raja Banks , Ref Wayne , Day Trading Addict , and Kojo Forex , among others.

These are some of the notable traders who have made fortunes trading the financial markets. The first and foremost requirement in any profession is knowledge. It takes wisdom to make a doctor or a lawyer, and so does it to make a forex trader.

This knowledge ranges from the dynamics to the mechanics of effectively trading the foreign exchange market. Firstly, a trader has to understand how to open a trading account, which involves choosing a broker that suits their trading style with brokerage costs and the type of trading instruments offered by the broker in mind.

Some brokers only offer the major currency pairs for trading, while others include the minor and exotic teams. Aside from the types of pairs, traders must know the different spreads brokers offer on the same couple. Thanks to forexbrokers. com , which has made it easy for traders to choose forex brokers that suit their particular needs. This website also provides the details of most of the top regulated brokers around the globe.

An individual must also understand the trading platforms used for analyzing and placing trades in the market. For example, Metatrader , TradingView , and Ctrader , among others. Some outlets are best suited for professionals, and others for novice traders. These platforms provide a range of tools and indicators that can be used to analyze and make informed trading decisions.

Knowing how to use trading tools and hands gives traders an edge as they help save time and aid risk management. In addition, the volatility and liquidity in the forex market differ with the sessions. Traders must therefore understand time zones. The sessions represent the business times of the cities and continents, i. Many trading activities happen when some of the sessions overlap, bringing more liquidity and volatility to the market. If traders know such, they can have an edge and may frame their strategies based on session underlying market behavior.

For example, the New York session is characterized as the one that experiences the highest trading volumes and, therefore, more liquidity and volatility. Thanks to software developers who have brought in auto session detectors. Another factor that traders must understand is the type of currency pairs they are interested in trading.

Currencies have different natures. Therefore, a good understanding of such natures may provide an edge. Getting knowledge is one thing; where to get the ability is another challenge in the forex industry. Unfortunately, many individuals masquerade as professionals on the internet, offering fake forex lessons. Thanks to babypips. com , a free online forex trading school for beginners. Another vital thing to understand as a trader is the world economy.

This is because the forex market and the rates result from the changes in economic policies and the balance of payments between zones, countries, trading blocks, and continents. Factors affecting individual economies particularly more significant economies drastically affect the forex market and its rates. For example, the disruption of trading routes affects the volumes of trade between countries, affecting the demand and supply of the currencies involved.

Another example is a war. If a country is at war, it is most likely that trading activities with other countries will decline, leading to a decrease in demand for such countries' currency and declining value against other currencies.

Traders also need to understand the type of goods and services exchanged between and among countries, zones, continents, blocks, and regions. A good understanding of such will give an insight into the flow of currencies, thus helping determine demand and supply shifts. Understanding the import and export routes gives traders an edge in understanding foreign exchange rates. A shift in the volume of trade flows and demand can signal to traders the possible change in forex rate between the countries.

Global disasters such as the covid pandemic also affect the international markets. Curfews caused a decline in global trading activities, hugely impacting the foreign exchange market. On the other hand, people always stayed indoors, which led to a surge in online trading activities. In summary, a good understanding of the global economy provides an edge in trading foreign exchange instruments instead of not knowing the world economy.

Traders must therefore keep up with business news and current affairs. They must have analyzed and concluded that they were right about their anticipated rate to place a trade in the market. So, how do traders know that rates will go up or down? This brings us to the most crucial concept of market analysis. Of course, different traders argue about the correct kind of analysis, but a lot of traders adopt all. Adopting all trading techniques means not leaning towards one analysis but incorporating all the factors in the different analysis techniques.

To most professional traders, blending all three techniques gives an edge in the market. Technical analysis uses historical data, i. In addition, technical analysis uses mathematical calculations and trend analysis to provide signals to traders.

Technical analysts use indicators such as oscillators, momentum indicators, volume indicators, moving averages, trend lines, and pivot points to predict where the rates and prices are most likely to go, turn or stop depending on the signal provided by the indicator. Technical indicators are based upon regression analysis to predict future behavior based on previous behavior.

In addition, mathematical models help to form a linear pattern that indicates future values. These are then programmed into digital indicators like the ones mentioned above. The market is a physical thing that follows a road map. Therefore, to place a trade, you must see where the price is "technical," whether you are a technical analyst or not.

This is why everyone must have some technical knowledge, if not most of it. Technical analysts also use price action to predict future price movements.

For example, most traders use Japanese candlesticks. This has been known to provide massive profits to different traders, including the inventor of the candlesticks, a man known as Munehisa Homa. Fundamental analysis is understanding the intrinsic value of currencies and the factors that cause their rates and prices to change. Although the elements are plenty, some have a notable and significant impact on the forex market.

The most notable factors that traders look at are interest rates, unemployment rates, GDP , wars, natural disasters, central bank monetary policy, the commitment of traders' reports, and inflation rates, among others. Since these fundamental factors primarily drive the market, traders must pay attention to changes in these factors to make sound trading decisions. A trader with good knowledge of these factors will likely have an edge in trading forex.

To follow up with the release of relevant economic data, traders can sign up with investing. com and the Bloomberg terminal. These platforms provide real-time updates on all the changes in financial data. This helps traders know and be well prepared for sudden volatility in the market. On the other hand, sentimental analysis involves looking at a depth of the market DOP to see where most traders are speculating on prices. Again, this helps to align with numerous traders and at least enough knowledge to aid decision-making.

Brokerage houses like IG provide this report in real-time to show traders that are net long, net short, and neutral in the market. Looking at the market sentiments may also give traders an edge in trading. Analysis approaches found in most trading handbooks focus on how the market should be analyzed technically and fundamentally. However, little emphasis is placed on this approach which focuses on individual traders.

Some of the most popular technical indicators are:. Moving Averages, or MA in short, are popular trend indicators used by Forex traders that represent average closing prices of the market over a specific period of time.

Moving Average on a chart is displayed as a line that smoothes out price action and is a good indicator of the trend direction. The Stochastic oscillator is a technical indicator tool used by Forex traders to predict trend reversals. It works on the theory that the momentum of a price change before the price actually changes its direction.

On a chart, it is displayed as a two-line indicator that fluctuates between 0 and As a result, forex traders use the Stochastic oscillator to predict trend reversals. The ATR is a popular volatility indicator that shows how much prices fluctuate, on average, during the specified period of time. The ATR indicator is displayed as a single line in a section underneath your chart that can move up or down.

The higher ATR, the higher volatility, whilst the lower ATR, the lower volatility. However, it is important to note that this indicator doesn't provide signals about potential trend direction, but instead it shows what is happening with the price volatility. The relative strength index is a popular oscillating momentum indicator used to measure the strength or weakness of currency pairs by comparing their upward movements versus their downward movements over a specified period of time.

On a chart, the RSI is displayed as an oscillator and can range from 0 to Forex traders believe that if the RSI indicator is at around the 70 level - the currency pair is overbought, whilst a currency pair at around the 30 level is oversold. Join ForexSignals. com and let our educational lessons, daily live streams and community help you understand the financial markets.

Join thousands of happy forex traders at ForexSignals. With a 7-day free trial you've got absolutely no reason not to give us a try. You won't regret it.

Offer valid for New Customers only. Offer can be amended or revoked at any time. Offer available on any membership plan. Forex Technical Analysis Technical analysis is the backbone of Forex trading. What is Technical Analysis? Using Technical Analysis To Trade The Forex Markets Charts, or more specifically, price charts, happen to be the first and most important tool that every trader using technical analysis needs to learn.

Examples Of Technical Analysis Tools Now that we have covered the definition of technical analysis, let's discuss some of the most popular ways technical analysts identify patterns and make predictions about future price movements in the Forex market. These fall within the following three categories: Chart Patterns Chart patterns, perhaps better known as trading patterns, are shapes within price charts that play an integral part in helping traders predict what prices might do next, based on what they have done in the past.

Candlestick Patterns Candlestick patterns are powerful indicators used by Forex traders to predict the future direction of price movement and identify potential trading opportunities. There are three types of Candlestick patterns: Continuation Patterns task gap, white lines, mat hold, line strike, separating lines Bullish Reversal Patterns hammer, morning star, three inside up, bullish engulfing Bearish Reversal Patterns hanging man, shooting star, evening star, three outside down.

Technical Indicators Forex technical indicators, or technicals for short, are an essential tool when trading the Forex market. Moving Averages Average True Range ATR Relative Strength Index RSI Stochastic Oscillator. Most Popular Technical Indicators Whilst there are a lot of indicators to choose from, they are all used to either identify market state or recognise potential trading opportunities.

Some of the most popular technical indicators are: 01 Moving Averages Moving Averages, or MA in short, are popular trend indicators used by Forex traders that represent average closing prices of the market over a specific period of time.

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In this modern world, traders can now sit at home and use the internet to trade currencies via a forex broker. We live in the days of Inflation ; Pandemics restricting business activities; The world going digital at a fast rate resulting in deteriorating living standards, job cuts, and unemployment, among others. So, let's talk about forex trading , shall we?

Forex trading is exchanging one currency for another to capture gains of changes in rates in the short, medium, and long term when the currency being held appreciates value increases against the cash that was exchanged. Traditionally, to exchange a currency for another, one had to have possession of physical money and take it to a bank, a bureau, or an individual for the exchange.

However, the advent of the internet has made it possible to exchange currencies online. While currencies are not the only instruments available for online exchange, this article focuses on the forex market. However, most, if not all, of the concepts outlined may apply to other financial markets such as the stock market, commodity market, crypto market, bond market, etc.

Most online financial markets products are offered in the form of Contracts for difference CFDs. CFDs are contracts that allow a cash settlement for the change in the price of an underlying asset without any delivery of physical goods or securities.

Most people refer to the online trading of financial instruments as forex trading because the forex market is the largest in the world and because non-specialists easily understand forex because of its societal significance and daily usage.

Profits are automatically calculated and can be withdrawn from the broker to the trader's bank account or e-wallet upon proper identity verification.

For example, Edo sells one euro for a dollar to Grace at the rate of 1. Now, imagine if the value being assumed was a million dollars. Thanks to financial leverage , traders can use margins to place trades beyond the capability of their equity. The example above describes how profits are made in the forex market without explaining how traders know 'how, why, and when the exchange rate between pairs would change and in what direction.

That, therefore, calls for a deep understanding of the dynamics and mechanics of the foreign exchange market, including the tools, factors, platforms, and strategies for trading currencies for consistent profitability. To become a consistently profitable trader, many tables must be turned.

Just like any profession, trading is an occupation that demands dedication and determination on the side of the trader. So don't turn trading into gambling.

Learn it properly! Forex trading falls under the umbrella of financial market analysis which is traditionally practiced by trained finance professionals and economists who learn about market analysis in their disciplines coupled with much professional experience.

So, to be a professional forex trader, one has to be thoroughly trained formally or informally and exposed to the financial world and its dynamics. One also has to dedicate a good amount of years, just like any other occupation around the globe. On average, it takes 5 years for doctors, 4 years for engineers, 3 years for lawyers, 3 years for economists, and 3 years for accountants to train professionally. It should also take similar, if not more, years to prepare a professional forex trader.

It takes many years to train a consistently profitable trader because forex trading is arguably the most lucrative among all professions. Traders have freedom time freedom, locational freedom, and financial freedom , not to mention that they are accountable to no one.

The forex market is also the largest in the world, with a daily trading volume of over 5 trillion dollars, of which the profits a single trader can make are only limited by the funds available in their account; so much that making 1 billion dollars in a single day is possible.

Below is a detailed 5 step guide to becoming a consistently profitable trader. This list has been made prior research from several explanations of professional traders worldwide, including George Solos , Mark Douglas, and Paul Tudor Jones. Other references have been obtained from famous traders like the Inner Cycle Trader , Raja Banks , Ref Wayne , Day Trading Addict , and Kojo Forex , among others.

These are some of the notable traders who have made fortunes trading the financial markets. The first and foremost requirement in any profession is knowledge. It takes wisdom to make a doctor or a lawyer, and so does it to make a forex trader. This knowledge ranges from the dynamics to the mechanics of effectively trading the foreign exchange market. Firstly, a trader has to understand how to open a trading account, which involves choosing a broker that suits their trading style with brokerage costs and the type of trading instruments offered by the broker in mind.

Some brokers only offer the major currency pairs for trading, while others include the minor and exotic teams. Aside from the types of pairs, traders must know the different spreads brokers offer on the same couple. Thanks to forexbrokers. com , which has made it easy for traders to choose forex brokers that suit their particular needs. This website also provides the details of most of the top regulated brokers around the globe.

An individual must also understand the trading platforms used for analyzing and placing trades in the market. For example, Metatrader , TradingView , and Ctrader , among others. Some outlets are best suited for professionals, and others for novice traders. These platforms provide a range of tools and indicators that can be used to analyze and make informed trading decisions. Knowing how to use trading tools and hands gives traders an edge as they help save time and aid risk management.

In addition, the volatility and liquidity in the forex market differ with the sessions. Traders must therefore understand time zones. The sessions represent the business times of the cities and continents, i.

Many trading activities happen when some of the sessions overlap, bringing more liquidity and volatility to the market. If traders know such, they can have an edge and may frame their strategies based on session underlying market behavior. For example, the New York session is characterized as the one that experiences the highest trading volumes and, therefore, more liquidity and volatility. Thanks to software developers who have brought in auto session detectors.

Another factor that traders must understand is the type of currency pairs they are interested in trading. Currencies have different natures. Therefore, a good understanding of such natures may provide an edge. Getting knowledge is one thing; where to get the ability is another challenge in the forex industry. Unfortunately, many individuals masquerade as professionals on the internet, offering fake forex lessons.

Thanks to babypips. com , a free online forex trading school for beginners. Another vital thing to understand as a trader is the world economy. This is because the forex market and the rates result from the changes in economic policies and the balance of payments between zones, countries, trading blocks, and continents.

Factors affecting individual economies particularly more significant economies drastically affect the forex market and its rates. For example, the disruption of trading routes affects the volumes of trade between countries, affecting the demand and supply of the currencies involved. Another example is a war. If a country is at war, it is most likely that trading activities with other countries will decline, leading to a decrease in demand for such countries' currency and declining value against other currencies.

Traders also need to understand the type of goods and services exchanged between and among countries, zones, continents, blocks, and regions. A good understanding of such will give an insight into the flow of currencies, thus helping determine demand and supply shifts.

Understanding the import and export routes gives traders an edge in understanding foreign exchange rates. A shift in the volume of trade flows and demand can signal to traders the possible change in forex rate between the countries. Global disasters such as the covid pandemic also affect the international markets. Curfews caused a decline in global trading activities, hugely impacting the foreign exchange market. On the other hand, people always stayed indoors, which led to a surge in online trading activities.

In summary, a good understanding of the global economy provides an edge in trading foreign exchange instruments instead of not knowing the world economy. Traders must therefore keep up with business news and current affairs. They must have analyzed and concluded that they were right about their anticipated rate to place a trade in the market. So, how do traders know that rates will go up or down?

This brings us to the most crucial concept of market analysis. Of course, different traders argue about the correct kind of analysis, but a lot of traders adopt all. Adopting all trading techniques means not leaning towards one analysis but incorporating all the factors in the different analysis techniques.

To most professional traders, blending all three techniques gives an edge in the market. Technical analysis uses historical data, i. In addition, technical analysis uses mathematical calculations and trend analysis to provide signals to traders. Technical analysts use indicators such as oscillators, momentum indicators, volume indicators, moving averages, trend lines, and pivot points to predict where the rates and prices are most likely to go, turn or stop depending on the signal provided by the indicator.

Technical indicators are based upon regression analysis to predict future behavior based on previous behavior. In addition, mathematical models help to form a linear pattern that indicates future values. These are then programmed into digital indicators like the ones mentioned above. The market is a physical thing that follows a road map. Therefore, to place a trade, you must see where the price is "technical," whether you are a technical analyst or not.

This is why everyone must have some technical knowledge, if not most of it. Technical analysts also use price action to predict future price movements.

For example, most traders use Japanese candlesticks. This has been known to provide massive profits to different traders, including the inventor of the candlesticks, a man known as Munehisa Homa.

Fundamental analysis is understanding the intrinsic value of currencies and the factors that cause their rates and prices to change. Although the elements are plenty, some have a notable and significant impact on the forex market.

The most notable factors that traders look at are interest rates, unemployment rates, GDP , wars, natural disasters, central bank monetary policy, the commitment of traders' reports, and inflation rates, among others. Since these fundamental factors primarily drive the market, traders must pay attention to changes in these factors to make sound trading decisions. A trader with good knowledge of these factors will likely have an edge in trading forex.

Reverse charting There is one particularly useful technical analysis tool which is easily available to forex traders but more difficult for traders of other asset classes. How do I fund my account? Firstly, a trader has to understand how to open a trading account, which involves choosing a broker that suits their trading style with brokerage costs and the type of trading instruments offered by the broker in mind. In addition, mathematical models help to form a linear pattern that indicates future values. The overall best technical analysis course , as determined by Investopedia, is through Udemy , but other highly-ranked ones include Bullish Bears , and The Chart Guys. Technical analysis involves the interpretation of patterns from the chart. Consecutive wins bring emotions and cause recklessness, and so does straight losing bring feelings and cause revenge trading.

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