Understanding the Basic Factors of Forex Market

March 21, 2018 by admin in Tips, Trading


Trading industry is one of the easiest investment sections in the world. But people always make it complex. You will be surprised to know that almost 95% of the retail investors are losing money in Forex market. You might be a successful businessman but when it comes to Forex trading profession, it’s very obvious that you will become emotional after losing a few trades. Controlling the human emotion is the hardest part in currency trading profession. You might be thinking that you have to deal with thousands of basic parameters. But in reality, trading is not that difficult. If you can learn the major sections of the market you can easily avoid losing trades and make a significant improvement in your trading career. We have filter the essential part that you need to learn as a full-time Forex trader

Fundamental factors

The Forex market is extremely volatile and the price of the financial asset is always reacting to the high impact news. Due to the scheduled news release, the traders get unique opportunity to place a trade with managed risk. As a new trader, you should never trade the high impact news. The market becomes extremely volatile in nature prior to the high impact news. The long-term existing trend of the market can easily get changed due to such news release. Knowing the fundamental factors of the market is not that hard. You don’t have to get a Ph.D. degree in economics. Just learn about the major news release and know its possible impact on the currency market. Once you start to understand the fundamental factors of the market you can easily assess the market sentiment and execute profitable trades with very low risk.

Technical factors

Technical factors are very easy to learn. Just open an online trading account and start trading the market using your trading platform. But how do you know when to place a trade? This where the term technical analysis will come into action. Studying the candlestick pattern and finding the key support and resistance level is known as technical analysis. As a technical trader, you should always trade with the market trend. The new traders often use lower time frame data to find profitable trades which is very risky. In the higher time frame, the false trade setups and spikes are being filtered out. But when it comes to lower time frame trade setup, you have to deal with thousands of variables which makes trading extremely difficult. So what is the best way to do the technical analysis in the Forex market? To be honest there is no exact answer to this question. However, if you learn price action and chart pattern trading, you can easily become a long-term trader.

Sentiment analysis

Sentiment analysis is the most important form of market analysis. You have to know how to assess the sentiment of the market. The retail traders often look for books and articles to learn the proper way to assess the sentiment of the market. But this not how you learn sentiment analysis. You have to trade the market for a long period of time to understand its sentiment. At times you technical and fundamental data might give you a trade signal which will not coincide your sentiment analysis result. In such case should you really execute the trade? Most professional Singaporean traders give more priority to the market sentiment. Always remember its better wait for long period of time rather than losing money on low-quality trades.

If you can understand these three important factors of the Forex market you can easily become a profitable trader. Instead of looking for the profit factors, you should focus on the development your strategy. Start trading the market with the demo accounts so that you can identify your trading mistake without losing any real money.