Currency Trading Forecast

Today there are more services than ever that will claim they can help with currency trading forecasts and there are numerous experts, who try and forecast the future movements of currency markets.

The Dangers of looking to Far Ahead

You will often see currency trading forecasts for months or a year ahead but these need to be treated with caution - as there are lots of variables that can and do change rapidly, so never look to far ahead. To forecast currency prices use the facts you have that are immediately available and use these as a basis for forecasting.

The reason currency trading forecasting is so difficult, is because prices do not just respond to the facts; they move based upon how traders see the facts. Understanding this relationship is an important part of your forex education. Lets look at why.

The Relationship between Value and Sentiment

Humans determine the price of anything and currency markets are no different.

We all have the same facts to look at but we draw our own conclusions individually on what we see. Humans are not logical; they are creatures of emotion and respond to greed and fear.

Throughout history the emotions of greed and fear see traders spike prices away from fair value. These sentiment spikes never last for long and prices eventually fall back to fair value. These spikes are easy to see on a forex chart and can be traded for profit.

If you want to enjoy currency trading success, you need to forecast when these spikes in sentiment are going to change.

As a forex trader the aim of your forex trading system is - to trade anticipate and trade these shifts in sentiment and use them to execute your trading signal at the right time when the odds are in your favor.

Forecasting the Fundamentals

Many traders like to trade forex facts that they see on newswires or in the papers.

While stories based upon the facts sound logical and convincing, as currency trading forecasts there normally convincing, logical and wrong.

The reason for this is the traders who trade these stories are not!

It’s a fact that markets make important tops or bottoms when the markets are at their most bullish or bearish – this is investor psychology at work. Markets become too bullish or bearish and break back towards fair value.

So it’s impossible to trade the supply and demand fundamentals in isolation, as by themselves they give no clues to where prices will go next.

Forecasting With Technical Analysis

Forex technical analysis simply assumes that all known fundamentals will quickly show up in price action (and in our world of instant communications this is truer than ever before) however, it also shows how investors perceive the fundamentals.

A currency trader using forex technical analysis is not concerned with how and why prices move; he simply wants to make forex profits when they do.

Judging Sentiment

The important point to keep in mind is that we can all look at the news and forecast where currency prices may go and we may or may not be right - however, by simply following and acting on price action on a chart we are effectively trading the reality of price change or trade the truth.

We don’t have to make a currency trading forecast, we simply trade the reality.

If you make this the basis of your forex trading strategy then you can enjoy currency trading success.

You will often see news stories that will say a trend will go on for ever and this indicates a bullish or bearish price extreme which is driven by greed and fear and it will exhaust itself. A piece of bullish forex news that does not move currency higher or bearish news that doesn’t push prices lower, is telling you that a change maybe at hand.

There is an old saying:

“If you can hold your head while everyone around them is losing theirs you probably haven’t heard the news”

In FX trading you have - but you have drawn different conclusions and are making a currency trading forecast against the majority. To do this you simply need to look at your forex trading charts for clues to where prices may go next.

If you understand the above relationship between sentiment and the fundamentals
You will have a head start in your quest for profits

You can trade with the trend until an extreme is reached and then look for turning points. You are making a currency trading forecast but you are also not acting on it until you see evidence of a change on a forex chart. You’re trading the confirmation or the truth and if you do this you can enjoy success.

How to Become a Currency Trader

Can anyone become a currency trader from home? The answer is yes, everything about successful currency trading can be specifically learned, by anyone with a desire to succeed but you must avoid common and currency Myths work on getting the right forex education.

Anyone can learn Currency trading here’s the Proof

A graphic illustration of how anyone can learn to trade was provided by legendary trader Richard Dennis - who took a group of people who had never traded before and taught them to trade in just 14 days.

The Result?

They went on to make $100 million dollars in 4 years and many became trading legends. This group Known as the turtles conclusively proved that everything about trading can be specifically learned.

But how do you go about becoming a currency trader and making regular forex profits?

The answer is you don’t need to work hard – but you need to work smart and just as importantly, get the right mindset for success.

Currency trading success is based on a sound logical forex trading strategy but also relies on the discipline to apply it, through periods of losses and to enjoy longer term success.

If you don’t have the discipline to apply your method, you simply don’t have one!

The Basics of a Sound Forex Trading Strategy.

• It should be simple – all the best currency trading systems are, as they tend to be more robust than complicated ones which have too many elements to break.
• The simplest and most time efficient way to trade is by using technical analysis and study forex charts. Here you need to isolate and spot important levels of support and resistance and then trade looking for the level to hold or break.
• A Good forex trading strategy will NOT try and predict in advance but will act on the reality of price momentum changes – either looking for these levels to break or hold, by measuring the velocity of price.
• You should never try and predict - you should use some momentum oscillators to confirm the moves and then execute your trading signal. You should keep in mind that some of the best high odds trades come from breakouts of new highs or lows and going with these breaks can yield substantial profits.
• Try and keep the rules of your trading system as objective as possible – if you have too much subjectivity in your system, your emotions can get involved and you will lose.
• Always assume the worst when you place your trade. Calculate your loss and make sure you have a stop in place – never use a mental stop.

The easy bit is getting your currency trading system together it should only take a few weeks study, the hard part is applying it with discipline.

To Win You Must Have This!

Discipline is a hard trait to acquire for most traders.

To acquire discipline, you need to educate yourself and know everything about the currency trading system you are going to use.

Only by having a complete understanding of how and why your system works, will you acquire confidence in its ability to be successful and from this confidence comes discipline.

The reason many traders don’t succeed is they blindly follow experts and systems they don’t understand. As soon as they hit a few losses, their discipline goes because they don’t have confidence in what their doing.

The biggest mental barrier for any trader is executing his trading signals in the face of consecutive losses (all traders will have them and they can last for weeks or months) and it is in these periods that you must stick with your system and not throw in the towel.

It sounds easy to do but is anything but – it’s very hard. If you want to achieve success you need to base your strategy on the right knowledge to obtain confidence and achieve discipline.

Work Smart NOT Hard

If you want to become a currency trader you don’t need to work hard as we have said you need to work smart AND treat it like you would any other business – one where you have to learn the basics and understand what you are doing. While this may sound obvious, it’s surprising how many traders thing forex trading is easy. They think they can follow some mentor blindly, or a story from the news and make money – it’s not that easy and you wouldn’t expect it to be, with the rewards on offer in forex trading.

If you want to become a currency trader from home you can - if you have the desire to succeed and a willingness to work smart and learn the right knowledge.

If you invest time and effort in becoming a currency trader you could enjoy currency trading success and you could set yourself up with an income stream that can create significant wealth. If you want to become a currency trader anyone has the potential but it’s up to you to realize it.

Best Forex Broker

If you want to trade then you need a forex broker and not all brokers are the same, here we are going to look at selecting the best Forex broker to help you maximize your FX trading experience.

A broker is not there to give you advice on trading.Sure, you may need support on the mechanics of trading but all trading signals should be your decision and yours alone.

Here are some points you need to keep in mind when selecting a forex broker to work with.

Trading platform

You can test platforms and you should select one that combines ease of operation with reliability. Most brokers will give you a demo account, so you can give it a test drive - take your time with your testing to see it works for you.

Spreads

This is your cost of doing business - so look for a pip spread that is not going to impact on your profits and losses. If you are a frequent trader, pips can mount up so look for competitive spreads.

Leverage

Most brokers offer good leverage of 100:1 and many now will give you to 400:1 - which enables you to increase your profit potential.

Negative Balance Protection

If you are using high leverage, it can create significant profit potential but it also creates risk. Many brokers for a fee will give you the comfort of negative balance protection. This is an ideal service for new traders who want to restrict risk.

Funding and withdrawals

Make sure that you can get your money back quickly and also there is a facility to fund your account online should you wish to top up quickly. Today, many brokers allow funding by credit cards.

24 Hour Service

You need a broker who has people to assist you online 24 hours a day so make sure this support is available.

Length of time in business

Forex brokers come and go so make sure that the one you use is an established name and they have been in the business for a while.

Trading Tools

Many brokers offer demo accounts and a range of support that includes:Newsletters, free guides and trading tips and if you are a new trader these tools can be a valuable extra bonus.

Currency Trading Books 10 Of the Best

Below you will find my ten of the best currency trading books and there not just for currency traders they are for any form of trading and apply to all markets. Any list of best currency books is of course subjective and this list is no exception. The list comes from reading thousands of books over the last 25 years.

These books won’t tell you how to trade or execute trading signals – building a currency trading system is a personal affair but they will run you through the concepts of trading and most importantly, the areas that many traders neglect namely – obtaining the right mindset for success, executing a trading plan with discipline and strict money management techniques.It’s a fact that anyone can learn to trade and anyone can build a trading method but the areas that most traders neglect are in the mind. Traders generally fail due to poor money management techniques and lack of discipline.The books below are listed in no order of importance - but these ten books will in my humble opinion help anyone become a better trader. I hope you enjoy them as much as I did.

1.Market Wizards (Jack Schwager)

Schwager interviews 17 trading legends including Richard Dennis, Paul Tudor Jones, Ed Seykota, Marty Schwartz, Tom Baldwin and others. One of the top-selling trading books of all-time and with good reason – if you can’t learn from these guys you can’t learn from anyone!

2. The New Market Wizards (Jack Schwager)

Follows the same format as the original book - another host of trading legends share their insights and knowledge on trading the markets.

3. Extraordinary Popular Delusions and Madness of Crowds – Charles Mackay

Over 100 years old and a timeless lesson for those who think that market behaviour can be predicted. If you ever get the feeling that a market simply can’t go any higher or lower read this book!

4. Trader Vic – Methods of a Wall Street Master (Victor Sperandeo)

Victor Sperandeo is one of those traders who piles up consistent gains year after year and here he shares his insight on everything to do with trading - from psychology, to trend following correctly, to money management.

5. The Disciplined Trader Developing Winning Attitudes (Mark Douglas)

This book was the one that really rammed home to me how important discipline in trading is and how hard it is to achieve in terms of mindset no matter how well prepared you feel you are or how good your trading system is. The ideas and concepts in the book are well presented, if somewhat repetitive. The author examines the psychology of fear that often hinders traders achieve trading success. Traders either love this book or hate it but those who dismiss it have either not read it or have not taken a very close look at themselves.

6. What I Learned Losing a Million Dollars – (Jim Paul Brendan Moynihan)

This books focus is on losing and as it correctly states

There are many different ways to make money but only a few ways to lose it.

Part biography and part a lesson in money management – if you only thought money management was placing a stop you need this book.

One of the most unique books you will ever read. It correctly points out that trading and investing are personal journeys of discovery; about finding out who you are, and then how to manage what you find and use this understanding to trade successfully in the markets. The reason why most traders never make money - it never occurs to them that trading is all about self knowledge not the method they are using.

7. The Way of the Turtle – (Curtis Faith)

While visiting a turtle farm, legendary trader Richard Dennis had a bet with his big pal and trading partner - Bill Eckhardt that great traders didn't have to be born - they could be made. To settle the bet, they recruited a group of individuals from all walks of life, gave them accounts to trade, and trained them for two weeks - hence the Turtle Traders. The Turtles earned more than $100 million in less than four years.

Here the most successful turtle Curtis Faith goes through the experiment in great depth offering his unique perspective on the experience, he explains why the Turtle Way works in today’s markets and how to apply it. He also shares his wisdom on taking risks, choosing your own path, and learning from your trading mistakes.

9. Technical Analysis of Financial Markets – (John Murphy)

A typical book from Murphy, well thought out, well presented and over 500 pages on just about everything you could ever want to know about using technical analysis on forex, or any other financial market.

This is a great reference book for any serious trader’s book library.

10. Currency Trading Fro Dummies – Mark Galant and Brian Dolan

If you have read of the other “for dummies” books you know what to expect. A great introduction and a lot more insight to being a successful trader than you would expect from a beginners book - the perfect book for novice traders.