Forex Trading Ė More Technical than Intuitive
The FX, Forex or foreign exchange, is all vis-ŗ-vis money. Foreign
currency from all around the world is available to be bought or
sold here. Any individual Forex trader or big and powerful
business firms can buy or sell currency freely, on this currency
When dealing in foreign currency exchange, there is an ongoing
cycle of buying and selling in the market. A trader can buy one
foreign currency and then sell it on a higher selling price, just
to buy another foreign currency, while making profit in between.
The only way to make money in Forex trading market to avoid as
much emotional involvement as you can. While making investment or
trading related decisions, always plan out a cautiously thought
out strategy that takes the recent market tends and history
patterns into consideration while making a deal.
With Financial markets, being intuitive or going with your
instincts does not help much. Forex being an extremely
unpredictable trading market where, at times, emotions tend to
cost more than a wrong strategy. Emotions can dominate your
trading sensibilities and decisions, making you go ahead with a
deal purely based on your gut instincts.
What needs to be understood is the fact that trading industry is
hard core strategy driven business. Market trends, rises and
falls, do not go by a traderís instinct, but can be influenced by
past patterns and trends. It happens a lot during the time when a
deal is about to be finalized, that the investor goes through a
moment of intuitive spurs and would want to change the trading
decision at the last moment. This should be avoided at any cost.
Whatever you are seeing in the market at the moment your deal is
being finalized, do not change your pre planned decision at the
last minute. So by the strategy you had planned in advance. Thatís
the only way to deal successfully with Forex trading, to be
systematic in your approach, analytical with your decisions and
insistent with your stand.
Be firm in your decisions. If you correctly analyze the trends of
the Forex market, you can easily come to know that although the
trading patterns are by and large predictable, there is a lot of
sinking and floating happening within those trends. Currency
prices rise and fall immediately. There is seldom any trend which
has a smooth rise or fall of currency prices.
These are the situations when intuitions can kill your deal,
landing you into major loss at times too. For instance, when you
find out that the currency youíre holding is taking sinking
southwards suddenly, you might get tempted to sell it off in loss,
pack your bags and leave. Similarly, if you see that the currency
you are holding is going on a rise, you try to buy more of it,
just to increase your profits. Now these are the situations where
emotional actions can kill your deal and thus, your trading
These are the times when you should hold on for a moment and study
what exactly is happening and bank on greatly on your trading
system. Your pre planned strategies and tactics will tell you
precisely when to trade, to reap highest profits.
Almost all the Forex professionals or pros will advise the new
traders and investors to build up their own trading system. This
planned trading system will tell you exactly what to buy, when to
buy, when to deal and what to deal for. Developing a trading
system based on technical and fundamental analysis can be of
benefit to its trader. Studying the past as well as present market
trends can be immensely effective in getting some knowledge about
whatís the future trend going to be.
There may come times, when your trading system and your instincts
may become opposites, and you might get caught in the dilemma not
knowing which to follow. This is the time when you should follow
your trading system, as it is not just a mere emotional spur of
the moment, but a suitably studied, pre planned strategy for a
market based on trends and patterns.
To make your trading system even more efficient, you should
clearly recognize the entry and exit point of your trading. Also
kept in mind should be the extenuating factors for these points,
and systematic strategy to exit properly. You should always set up
a stop-loss order and a take-profit order in your deal. Clearly
defining these exit points will help you, either by increasing
your profits, or by decreasing your losses.