Trading Pathway

It;'s best to trade the USD pair since it usually has the best liquidity. Some of them are:

• EUR/USD
• USD/JPY
• GBP/USD
• USD/CHF
• USD/CAD
• AUD/USD

The EUR/USD pair is well-known for its high volatility. To this day, the EUR/USD remains the most volatile pair in forex history. This fact has attracted the attention of many traders in the market.

As the single currency of several countries, the Euro is greatly influenced by the political and economic developments of these countries. In just one day, there are many different data releases from its 16 member countries. On the other hand, news throughout the day related to the US economy and its major trading partners will also affect the value of the Dollar. Thus, it is clear that there are many opportunities to take advantage of the EUR/USD, even with small price movements.

The overlap session of London and New York is a favorite time for short-term traders. This is because major pairs involving the Euro, US Dollar, Pound, and others are experiencing significant range increases during this session.

If you are using a news trading strategy, the best time to trade the EUR/USD is during the overlap session. But if you want to apply breakout trading, then you can take advantage of the rapid movements at the beginning of the London session.

It;'s best to trade the USD pair since it usually has the best liquidity. Some of them are:

• EUR/USD
• USD/JPY
• GBP/USD
• USD/CHF
• USD/CAD
• AUD/USD

Some pairs often move in different directions or, conversely, move in the same direction up to a certain degree. In the following graph, several pairs have more than -80 hourly correlations. That means they are negatively correlated; when one pair moves upward, the other one tends to move downward. 

Economic indicators are data released by the government or private organizations which can be used to see the economic performance of a particular country. After the release, there will be either a positive sentiment (optimistic) or a negative one (pessimistic) about the policy or economic condition of the country. This sentiment influences market player decisions and affects the country's exchange rate.

Some important economic indicators that affect the forex market are:

• Unemployment Report: Reports about a country's unemployment.
• Gross Domestic Product (GDP): Consists of the total market value of a country's goods and services.
• Retail Sales: Measures the total sales of goods and services by retail establishments over a specific period.
• Production Reports: Shows fluctuation in industrial productivity.
• Trade Balance: A measure of a country's exports minus its imports.
• Consumer Price Index (CPI): Measures the changes in the consumer's goods price in 200 categories.

Economic indicators play a crucial role in understanding and evaluating the health of an economy. These indicators provide valuable insights into various aspects of economic activity, such as employment, inflation, trade, and overall growth. They help policymakers, investors, businesses, and individuals make informed decisions and formulate strategies. Economic indicators allow us to assess the current state of the economy, identify trends, and anticipate potential changes or risks.

They provide a foundation for economic forecasting and planning, enabling policymakers to implement appropriate measures to stimulate growth or manage downturns. Additionally, economic indicators help investors gauge market conditions and make informed investment decisions. These indicators are essential for monitoring and analyzing the economic landscape, contributing to informed decision-making, and fostering stability and growth in local and global economies.

Technical analysis tools like charts and indicators can help you identify potential entry and exit points, making informed trading decisions based on historical price movements and market trends. Technical analysis can provide useful insights into market trends, price movements, and potential price levels, helping you to identify patterns and trends that may influence your trading decisions.

By analyzing technical indicators like moving averages, oscillators, and candlestick charts, you can identify potential entry and exit points that maximize your profits while minimizing risks.

Generally, you can use any kinds of indicators you want. But ideally, it is best not to use more than 2 technical indicators. The reason is that the signal it produces might be confusing for you. Also, analyzing too m any indicators might make you lose momentum.

Technical indicators can be a great way to support your traders. But, solely relying on technical indicators might not be wise. It would be best if you also considered news and other economic events.

Fundamental and important data affect the demand for a currency, especially the Gross Domestic Product (GDP), the Consumer Price Index (CPI), and the Employment Figure. Those three indicators reflect the economic condition of a country and they directly affect the exchange rate of the currency.

Whatever strategy you use in trading, you must monitor the three data mentioned for determining the tendency of currency's price movement based on the capital inflow and outflow in the country. The country with a strong economic condition will attract more investors so more money supply will flow into the country, and vice versa.

The fundamental analysis in forex trading is used for learning the economic factors which cause the dynamic transaction of traders of a currency pair. In other words, applying the fundamental strategy uses some data and important events as the fundamentals of analyzing market outlook to determine the ideal trade. The data or the events are generally mentioned as high-impact factors.

If there are economic data that performs better than expected and affects the economic situation in a country, we then can find another currency from a country that experiences a weaker economic situation. For instance, if the economic data of the Euro area or Germany is in a good condition while the United States' situation is weaker, it means we can buy EUR/USD.

A specific economic report (like NFP or GDP) is only a single piece of a jigsaw puzzle. When they are pieced together, only by then you can get an insight into "the big picture".

If you only narrow down on a single piece while ignoring the other pieces, you are prone to be misled. That's why you can't only rely on a single so-called high-impact data release all the time without considering other economic data releases.

There are three rules to remember in applying fundamental analysis:

1. Not all high-impact news is a game-changer
2. Understand concepts about currency data
3. Don't leave technicals behind

For example, USD seems to be going strong because of some economic data are better than ever. However, you later found out that instead of going downward, GBP/USD holds out and then moves upward! Well, it might be that the GBP is fundamentally stronger than the USD.

A strong currency does not mean that the currency will emerge as the overall champion in the forex market.  Remember that currencies are traded in pairs within a globalized forex market, which mean: influential fundamentals come from both sides and more.

You should not only observe fundamental dynamics of one or two currencies but also global market dynamics. Prices are determined by supply and demand in that market, so you should think about market sentiments too.

The right moment to enter the market naturally is around news releases, particularly high-impact news releases with average movements of 30 pips or more. That may include:

1. Non-Farm Payroll USA (100 – 200 pips).
2. Trade Balance USA (70 – 120 pips).
3. Interest Rate Statements (approx. 100 pips).
4. Durable Goods (50 – 100 pips).
5. Producer Price Index (50 – 60 pips)
6. PPI excl. Food and Energy (50 – 60 pips)
7. Consumer Price Index (50 – 60 pips).
8. CPI excl. Food and Energy (50 – 60 pips).
9. The Fed Chief Speaks (30 – 100 pips).
10. Unemployment Rate (30 – 50 pips).

All investors, speculators, as well as traders, always consider interest rates to get the biggest and increase their investment portfolios. Therefore, countries with higher interest and better economic fundamentals will tend to attract capital flow.

As indicated on the monthly chart below, EUR/AUD experienced a decrease of 10,839 pips between 2009 and 2014. At the time it had been happening, the interest rate of the Australian central bank was 4.75%. On the other hand, the Euro central bank only put a 1.50% rate. Traders and investors then used the difference in interest rates for getting profit by selling EUR to buy AUD.

Technical analysis refers to an analysis method that is based on market statistics. This includes the use of chart patterns, trends, support and resistance levels, volume data, and so on.

The goal is to predict how the market might act in the future based on the patterns found in past market behavior. Technical traders believe that the market's future performance can be determined by analyzing the past performance data.

Because of its unpredictable nature, traders relying only upon technical analysis in decision-making often avoid news releases with short-term impacts.

They consider the movements around news releases too random and out of the ongoing trend, so the swings are temporary.  Traders chose to monitor currency pair movements and not open any position when the market blows.

Yes, you can also use technical analysis for CFD trading. This strategy involves studying historical data as well as charts in order to make predictions on future price movements. You can also use the help of technical indicators to analyze the market better. The problem with this strategy is that it requires you to study how to use indicators, how to read the charts, and many more.

A scalping method is generally applied in a 1-minute to 1-hour time frame with certain indicators. Besides the technical indicators, the reading and interpreting abilities on the price movement are very helpful and necessary. The example below is taken in a 5-minute chart.

Yes, it is. The fundamental analysis makes it possible for traders to understand the growing sentiment for a certain pair and where prices are going to go, but that needs to be supported by technical analysis to identify the best entry and exit points.

There are many other advantages of mastering the basics of both analyses. For instance, technical indicators could give an early warning when market sentiment changes or when the market has stretched tight (which means you should get out of there quickly).

If price movements is a human, then fundamental analysis and technical analysis are the two feet. Learning one without the other is like trying to walk with only one foot.

For a short time, you might be able to do that, but sooner or later, you will stumble and fall.

Yes, we can. Although not the main focus, technical analysis and trends will still be studied by macro traders. Financial markets go up and down very quickly, so it's impossible for macro traders to identify the best location to enter and exit the market without performing some technical analysis.

Instead of focusing on different types of indicators to combine, macro traders would apply simple technical analysis that mostly involves price action, support and resistance, as well as 1-2 trend indicators.

One of the reasons why beginner traders tend to lose is because they rushed to use live accounts. They might be surprised and not ready to face the real market conditions. It is best to start from a demo account since it allows traders to 'feel' the real market situations without actually facing the risk.

Installing a demo account is easy. That's because you can get it free from your Forex broker.

1. Look for the "open demo account" button somewhere on your broker registration page. From there, brokers may offer more than one type of demo account, like; MetaTrader4 or 5 (MT4 or MT5), cTrader, etc. If you're pretty clueless, just pick MetaTrader4 because it's one of the most popular trading terminals.
2. Alternatively, you can download MT4 from the MetaQuote website. Once you start pressing the download button, the client file should stay on your computer folder. Step two, locate that mt4setup.exe file on your download folder.
3. Fill the checkbox to confirm your installation agreements. After then, click next. Additionally, you can change the MT4 installation directory by clicking the Setting button.
4. Wait until the installer finished downloading all the required files. When it's done, click the Finish button.

Voila, now you're done with the basic installation!

Each broker has various types of services that they can offer to clients. Below is a list of questions to determine the most suitable broker based on its demo platform:

• How can I place a stop or limit order?
• Can the orders be set automatically or at the time of entry?
• How do the spreads on the platform vary over time?
• What is the typical spread?
• What is the lot size I can trade (0.01, 0.1, or 1 lot)?
• Can I mix and match the lot sizes?
• Is customer service reliable even if my internet connection is down?

Generally, good brokers for demo trading have notable regulatory licenses, good reputation among clients, long-time experience in the business, and a wide choice of tradable assets.

• The speed of execution: If the trades are executed quickly and without any, this is a good sign of the quality of the brokerage services.
• The spreads: Lower spreads are generally better, meaning traders will pay less in trade fees.
• The commissions: Lower commissions are generally better as traders will keep more profits
• The platform: The platform should be easy to use and navigate and offer all the features traders need to trade effectively.
• Customer support: If traders have any questions or problems during their demo trading, they should be able to get help from the broker's customer support team quickly and easily.

The foreign exchange market basically works like other traditional markets. Simply put, to make a profit out of it, you have to offer something at a higher price than its original value. Well, that's easier said than done. To better illustrate it, we'll make a demonstration.

Take a look at the picture above. It's a chart depicting the Forex rate change in EUR/USD pair. As you can see, the forex rate went down from the end of September to November. During that time, you can make a profit by pressing the sell button to open a position. Let's say you open the position at 1.12500 by one full lot on 26th September. If you manage to hold your position from that day to 18th November 2016, you'll successfully close a deal that's worth about USD6,720!

But remember, simulation is the keyword. Whatever you're going to do here can't reflect 100% actual live account trading conditions. That's because there are some things that one can only experience in live trading sessions.

Most forex brokers provide demo accounts for free to their clients. Below are some forex brokers with the best demo accounts:

• IC Markets: Available in all account types, platforms, and all instruments.
• OANDA: Allows CFD trading account and test trading strategies under real market conditions.
• Exness: Offers vast opportunities for different types of traders.
• XM: Avaliable for all XM Real Account holders.
• Tickmill: Allow traders to try low spreads, fast execution & great trading conditions risk free.
• OctaFX: Allow trader to open as many demo accounts as they want.
• Pepperstone: Provide real market pricing and can be offered with up to 50,000 virtual funds.
• FBS: Available for all account types and instruments.
• eToro: Get a free $100,000 Practice Account upon joining.

Honestly, that's a hard subject to answer. Why? Because each individual is different from one another.

Let's say on rare occasions, you had randomly opened a position and somehow scored handsome profit. But in another, you had wished for the same thing, only to found that you have lost more. In that case, a better-educated trader will learn and adapt faster to improve his trades.

Alternatively, a better-motivated trader may persevere harder in the face of many difficulties. So, which one are you? Are you that smart guy who learns fast? If that's so, it may only take some weeks before you discover a consistent trading system that suits your strategy. Or, are you that motivated trader who persists against many bad trades? Well then, you may have to keep trading on a demo account until you know what to do with trade signals.