Forex traders generally use the Online Forex News, as well as the realtime forex news to determine which currency pairs would be the most probable to yield a worthwhile profit before initiating trades in the forex market. As an example, some currency pairs may be more challenging to trade than others and may not be as suitable for less experienced traders, such as AUD/USD. The exchange rate AUD USD has recently traded with increased volatility due to rising commodity prices, such as the price of crude oil and gold.
In addition to volatility, other considerations that traders must consider consist of how deep the markets in the currency pair traded, and how wide the bid/offer spreads are. Also, how much the currency pair is subject to sharp exchange rate movements upon the release of key economic data.
A review of the USD forex news can give a trader a sense of what currency pairs may be the best to trade for their level of experience and risk tolerance. For example, EUR/USD generally is one of the most liquid forex currency pairs with long sweeping moves and in many cases very narrow bid/offer spreads.
A review of the USD forex news can give a trader a sense of what currency pairs may be the best to trade for their level of experience and risk tolerance. For example, EUR/USD generally is one of the most liquid forex currency pairs with long sweeping moves and in many cases very narrow bid/offer spreads.
Fundamental and Technical Market Research
After the trader has determined which currency pairs offer the best opportunities for profitable trades, they can then begin doing research to determine entry and exit points for their trades. Most successful traders employ a combination of both fundamental and technical analysis in their trading strategies.
The way traders sometimes combine these two techniques, is to use technical analysis for timing entry and take profit points by using price graphs and other short term technical indicators. Conversely, by using fundamental analysis, traders can more accurately determine mid term and long term trends for exchange rate movements.
The way traders sometimes combine these two techniques, is to use technical analysis for timing entry and take profit points by using price graphs and other short term technical indicators. Conversely, by using fundamental analysis, traders can more accurately determine mid term and long term trends for exchange rate movements.
Making a Euro Currency Forecast
As an example, a trader might make a long term USD Euro forecast based on fundamentals such as historical interest rate differentials, European Central Bank monetary policy and current events.
Recently, some European nations such as Greece and Ireland have received bailouts from the ECB and the IMF to shore up their beleaguered economies. These developments have weighed on the EUR/USD exchange rate.
Nevertheless, according to the daily forex news, inflation concerns due to increasing productivity in nations such as Germany and France have prompted the ECB to raise interest rates, which would be beneficial for the value of the Euro against the U.S. Dollar and other currencies.
Using Technical Analysis for Entering and Exiting Trades
Once the trader has decided on a mid to long term direction, they often use technical indicators such as oscillators to determine optimum entry and exit points in the currency pair’s price action.
An oscillator such as the Relative Strength Indicator, will give the trader an idea when the currency pair is either overbought or oversold, giving the trader a good indication of when to initiate or liquidate a trade.
Incorporating both technical and fundamental analysis to a trading plan seems to be the most effective way used by successful traders for their Trading Strategies. A good foundation in both forms of analysis will yield the best results.
An oscillator such as the Relative Strength Indicator, will give the trader an idea when the currency pair is either overbought or oversold, giving the trader a good indication of when to initiate or liquidate a trade.
Incorporating both technical and fundamental analysis to a trading plan seems to be the most effective way used by successful traders for their Trading Strategies. A good foundation in both forms of analysis will yield the best results.
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