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Figuring out your approach to market analysis
First, check overnight developments for the Forex market. What data came out, how did currency pairs react, and who said what? Because the Forex market is open all night long, twenty-four/six, it is imperative that the first step you take each morning is that of checking on changes that occurred while you were sleeping or not trading. Second, look at major market movements in other markets and what happened as a result. Find out why things happen. For example, if gold prices go up significantly, find out why. Because other markets are significantly smaller than the Forex market, none of them directly impact the movement of the Forex market, but understanding what outside forces caused the movement within other markets can help you decide if that same thing will impact currencies. Third, look at data releases and market events expected that day. For example, what retail sales reports come out, or central bank rate announcements come out, etc. How will they affect the market? You should look at this early so that you can anticipate outcomes with the rest of the market. If you don't, all the other traders will be ahead of you, and you won't get the results you desire. In fact, it will be very difficult to make smart moves without this information. Fourth, do a multiple time frame technical analysis of major currency pairs. This helps you see how the data and news you are gathering affects individual currency pairs. It allows you to determine how the currency pairs you are most interested in will fare that day. Fifth, look at current events and politics. Stay up to date on major issues and elections, political scandals, conflicts, etc. in the major currency nations. The political movements of these nations will impact currencies, and thus should not be ignored. Keep CNN on in the background, and pay attention to events that could impact currencies whether it is for the good or the bad. If you can watch these five areas, you will have a far better grasp on the market and the massive amounts of information that flow through it each day. This will allow you to more accurately create a trading strategy that is effective. Choosing a software that helps you analyze can be useful as the amount of information is vast. |
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