Choosing a free currency trading strategy for trading the forex markets can be confusing because there are so many different strategies to consider.
But the two basic areas where all strategies full under are Technical analysis and Fundamental analysis.
However, when choosing a forex strategy you will find plenty of information and strategies with technical analysis. This is by far the most popular of the two strategies used by individual forex traders.
Here is a brief overview of both forms of analysis and how they directly apply to forex trading:
Fundamental Analysis is the least marketed by marketing guru’s because until recently only a handful of professional successful traders understood the mechanics of interpreting the results.
And many so called guru technical traders underplayed the importance of Fundamental evaluation and how to apply it in conjunction with technical analysis becuase they didnt have a clue how to use it.
Many Technical traders will say that Fundamental analysis in the forex market is extremely difficult to understand, and you will need to become an Economist to interpret a country’s economy.
Free Currency Trading Strategy Tip #1: But the truth be told, it is really not that difficult to understand the basics that drive an economy.
However it is important to mention that some traders do trade short term strictly on news releases. There are a lot of different fundamental indicators of the currency values released at many different times.
Here are a few of the most popular ones:
1. Non-farm Payrolls
2. Purchasing Managers Index (PMI)
3. Consumer Price Index (CPI)
4. Retail Sales
5. Durable Goods
6. Gross Domestic Product (GDP)
When Choosing a Forex Strategy that uses Fundamental analysis, you need to know that these reports are not the only factors that you have to prepare for.
There are also quite a variety of meetings where you can get some quotes and commentary that can affect the markets just as much as indicators news release.
These meetings are conducted frequently by various political heads from all countries. They often talk about the state of an economy and discuss interest rates, inflation, and other issues that have the ability to affect currency values.
Even changes in how things are worded when addressing certain issues such as the Federal Reserve chairman's comments on interest rates can cause a volatile market.
Free Currency Trading Strategy Tip #2: Critical Economic News Releases For Trading USD
Two important meetings that you have to watch out for if you are trading the Dollar (USD) are the:
Choosing a forex strategy that will assist you learning how to interpret the reports and examine the commentaries will also help a you, the forex trader to get a better understanding of the longer-term market trends.
But this understanding will also assist the short-term trader to profit from these unexpected results on news releases.
It is important when choosing a forex strategy that applies’s a fundamental approach that you keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with access to this kind of information.
When choosing a forex strategy that teaches technical analysis on the other hand you will find by far the most abundant of the two strategies available.
And you will also find that it is very similar to analysis done in the equity markets. Technical analysts of the forex trading market, analyze price trends.
The only real difference between technical analysis in forex and technical analysis in equities is the time frame that is involved in that forex markets are open 24 hours a day
For this reason some forms of technical analysis that factor in time have to be modified so that they can work with the 24 hour forex market.
Some of the most popular forms of technical analysis used in forex are:
There are many others but my favorite are Fibonacci studies.
Technical analysts have a tendency to combine technical studies to make more accurate predictions; they will use a combination of studies for a trade confirmation. Some use the studies in an effort to repeatedly locate similar buying and selling conditions.
Most successful traders choose a forex strategy and perfect it over a specific period of time. Some people will focus on one particular study or calculation, while still some others use broad spectrum analysis as a means of determining.
Most experts would likely suggest that when choosing a forex strategy, chose one that will use a combination of both fundamental and technical analysis.
This will help you make long-term projections and also determine entry and exit points. Of course, in the end, it is the individual trader who has to decide what works best for him.
When you are ready to get started in the forex market, you should open a demo account and paper trade so that you can practice until you can make a consistent profit.
A great number of people who fail have a tendency to jump into the forex market and quickly lose a lot of money because they lack experience.
It is important to take your time and learn to trade properly before you start committing capital.
When you choose a forex strategy and you develop the confidence to start trading live with it, the next area of development will be to trade without emotion. For 95% of all traders this is the toughest to develop because of the mind set you bring to the table.
But remember keep things simple and realize that you need to follow the trends. If you go against the trend, you are swimming up stream and the odds are against you. The Forex market tends to trend more often than anything else and you will have a higher chance of success when trading with the trend.
If you need more information on choosing a Free Currency Trading Strategy that is right for you, you can sign-up for the Free 7-Day Action Guide.
The best way to figure out exactly which strategy to use, is by joining a Forex Successful Trader Community, sign up for a Forex Live Training room, watch a professional execute trades and feel which one suits your personality.
The FxST provides a free currency trading strategy - the 7 day action guide course on how you can start to foundations of building a successful Forex business - you watch the S.I.P.E method introduction video.
If you need help deciding, just ask any Forex Successful Trader and they will be more than happy to help you out.
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