Trading the forex markets can be a profitable endeavor whether you decide to make it a full-time job or a part-time hobby. In addition to educating yourself about the nuances of each market and why the tick, you need to have several trading tools in your took-chest to help you make the process functional. In addition to finding a great trading application that will allow you to follow the markets and help you trade, you want to make sure that you have access to a mobile app that works on both iOS and Android.
Learning About the Markets
Whether you are an expert trader or a novice, you need to spend time learning about a market before you initiate any risk of real capital. Start with the education section on your broker’s website. Look for articles or even videos that will provide you with information about why the market moves and some catalysts that drive prices. You should also consider searching the web for pertinent information or looking at some reputable news outlets to enhance the information you are gathering. You can never know enough.
Markets move because of sentiment changes. A change in sentiment can lead to a change in momentum, which can push prices to a new equilibrium. A change in sentiment will occur when there is new information available. This includes news, that is released on a regular schedule or surprising information that has never been heard. What you should assume is that all the current, readily available information is incorporated into the price of a security. What happens next is what you should care about.
An Economic Calendar
To create a view of what is likely to happen next, you should consider following a schedule that includes information about the news that is scheduled to be released. You can find that on your broker’s economic calendar. This type of calendar shows scheduled economic releases from countries around the globe, along with what is expected by an average of economists, as well as the last release.
What you should expect is that the market has priced in what economists expect. If the news is different, the exchange rate of a currency pair should move to reflect the new information. One of the best ways to follow an economic calendar is through your smartphone. You can schedule alerts for those that are very important, so you won’t miss them even if you have another obligation. If your broker does not have an economic calendar several news outlets provide this information.
Look at Price Action
In addition to following the news and evaluating how it will impact the price of a security, you should consider looking at historical price movements. A chart of the price of an asset is like a map. It tells you where prices have been, which could help you decide where it might go. It’s helpful to look at historical prices to determine the future movement of prices. You can look at prices for all different time frames. For example, you can evaluate daily, weekly, monthly or even intra-day prices.
The best way to evaluate historical and real-time price movements is via a chart. Your forex broker likely provides a chart with its trading platform. You might even be able to click on a price or exchange rate and the chart appears. You can analyze line charts or bar charts or even candlestick charts.
If you are on the go, you want to make sure that your broker provides a mobile chart package with the software that executes trades using either iOS or Android. You want to make sure that you can see the charts clearly and that you can add studies to the charts. Most charting packages include studies that include moving averages, as well as momentum oscillators and overbought and oversold indicators. It’s helpful to look at these charts initially on a laptop or desktop to make sure that your mobile device is providing you with the information that you need to make a trading decision.
Use a Demonstration Account
Once you have enough information to make a trade, you should test drive your theories using a demonstration account. A demo account uses demo money instead of real money. Using a demo account, you can test the execution model of the platform, to make sure that when you make a trade, you do it correctly. You can then analyze your positions as well as the balance sheet. When using a demo account, you should not be afraid of making a mistake. You can also test different trading strategies to see if they work in real-time.
The Bottom Line
The key takeaway is that if you want to trade successfully you need to spend time learning how to trade and have the necessary tools to help you trade efficiently. You can teach yourself how to trade through your broker’s education portal as well as by looking online for specific methods. You also want to learn how to evaluate the market using new information and track that information using some form of economic or financial calendar. Lastly, make sure that you have a way to analyze price movements. Using a chart is a preferable method and access to charting through your mobile device will allow you to trade the securities you trade while you are on the go.