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How To Trade Forex The Prudent Way
Fundamentals of the currencies depend on the following: 1. Interest rate. The higher the interest rate, the higher the probability for that currency to rise. This is because traders and investors are always looking for yield. 2. GDP growth: When a nation has GDP growth, market will have more confidence in that nation. Hence will invest in the currency of that nation. 3. Budget account surplus: When a nation has budget account surplus, this means that the nation as a whole has more revenue inflow than expenditure outflows. Currencies with budget account surplus tend to appreciate. Currencies that fit into good fundamentals: AUD, NZD. SGD, CAD, CHF. Currencies that fit into bad fundamentals: EUR, GBP, USD. So normally I will buy the currency with good fundamental. At the same time sell the currency with bad fundamental. My favourite FX pairs to go long are: AUDUSD and NZDUSD. My favourite FX pairs to go short: EURAUD, EURNZD, USDCAD, USDSGD and USDCHF. After I had identified the FX pairs to go long and short, I will look at the technicals on those pairs. In FX trading, the trend is your friend. I always tell my students not to go against the trend. By going against the trend, you gain potential 80 pips but you risk 200 pips. So how do I identify the trend of the FX pair? You can do so by inserting 100 and 200 days EMA (Exponential Moving Average) into your FX charts, you will be able to see what is the trend of the currency pairs. If the FX pair is trading in an uptrend, I will be interested to buy if the price goes below 100 days EMA. If the FX pair is trading in an downtrend, I will be interested to sell if the price goes above 100 days EMA. Article Directory: http://www.articledashboard.com Market Strategist Tactical Trading Academy Website: TradingEducationProgram.org/ Email: metal.commodity@tradingeducationprogram.org |
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