21 Nov, 2006
The smart combination for the forex trader
The first thing you should know about forex trading is how to manage you money wisely. After learning and practicing that, there is a phase in each trader investing life, when he must choose his beliefs. Some believe in the fundamental system and some in the technical system. From my experience I learned that to be a smart trader you should learn them both and use a combination of them for forecasting the forex movements wisely.
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I’ll give you a short explanation of them both. The technical system is basically trying to forecast the forex market movements by analyzing the currency movement history and examining graphical statistics. There are many of technical indicators to choose from, each trader finds the indicators that fit him the most, and the best way is to practice them out while trading. Only by personal experience you’ll learn. It may take time, and probably some mistakes that will lead to a loss of money, but once you got the trick, you’ll be able to use them for tripling you current profits. Here are a couple of examples to the indicators you can choose from: RSI, the Bollinger Bands, Elliot Waves, MACD (Moving average convergence divergence), Stochastic, Pivot Points and - and that's just the tip of the iceberg.
The fundamental system is based on the news effect on the forex market. By analyzing news from all over the world and other economic reports such as Consumer Price Index (CPI), Retail Sales, The Gross Domestic Product (GDP), Industrial Production and more you can forecast how the market will react, what eventually equals to where the market will probably move.
Both of the systems are effective and useful while trading in the forex market, but if you ask for my advice, not using both of them is like swimming with only one arm. By using those systems you’ll expand your winning odds and reduce your loss odds.
