|
Trade logical transaction sizes: Margin trading allows the FOREX
market trader a very large amount of leverage, trading at full margin
capacity can make for some very large profits or losses on an account.
Scaling your trades so that you may re-enter the market or make
transactions on other currencies is generally wiser. In short, don't trade
amounts that can potentially wipe you out and don't put all your eggs in
one basket. We offer the same rates regardless of transaction sizes so a
customer has nothing to lose by starting small.
Gauge market sentiment: Market sentiment is what most of the market
is perceived to be feeling about the market and therefore what it is doing
or will do. This is basically about trend. You may have heard the term
'the trend is your friend', this basically means that if you're in the
right direction with a strong trend you will make successful trades. This
of course is very simplistic, a trend is capable of reversal at any time.
Technical and fundamental data can indicate however if the trend has begun
long ago and if it is strong or weak.
Market expectation: Market expectation relates to what most people
are expecting as far as upcoming news is concerned. If people are
expecting an interest rate to rise and it does, then there usually will
not be much of a movement because the information will already have been
'discounted' by the market, alternatively if the adverse happens, markets
will usually react violently.
Use what other
Currency Traders use:
In a perfect world, every currency trader would be looking at a 14 day RSI and
making trading decisions based on that. If that was the case, when RSI
would go under the 30 level, everyone would buy and by consequence the
price would rise. Needless to say, the world is not perfect and not all
market participants follow the same technical indicators, draw the same
trend lines and identify the same support and resistance levels.
The great
diversity of opinions and techniques used translates directly into
currency price
diversity. Traders however have a tendency to use a limited variety of
technical tools. The most common are 9 and 14 day RSI, obvious trend lines
and support levels, fibonnacci retracement, MACD and 9, 20 and 40 day
exponential moving averages. The closer you get to what most traders are
looking at, the more precise your estimations will be. The reason for this
is simple arithmetic, larger numbers of buyers than sellers at a certain
price will move the market up from that price and vice-versa. |
