Looking At Forex For Beginners
Forex for beginners can be a complicated learning curve. The proliferation of online trading educators has been a double edges word for those seeking to learn to trade. Whilst the new traders of today have unparalleled access to a wealth of information it can be difficult establishing where best to employ your efforts.
Trading strategies, methods of analysis, forex indicators and various psychological trading programs can all be accessed at the click of a mouse but one of the biggest assets new traders need to be aware of when studying forex for beginners, is time. Wasting time on poor quality information, unrealistic trading strategies and/or unhelpful indicators can make the beginners learning journey a frustrating experience. Perhaps one of the key tasks for anyone starting to learn trade is identifying which areas of Forex for beginners to focus on.
Key Areas of Forex For Beginners
Among the wide array of areas of new traders to spend their time researching there are a few key elements which if understood correctly, can help new traders quickly develop a solid grasp of forex trading and help them in both designing trading plans and developing expectations.
Also known as macroeconomic study, is a means of analysis whereby traders measure the underlying strength of an economy with a view to how the economy’s currency is then likely to perform against the currencies of other economies. The basis of applying this form of analysis is keeping track of the variety of economic news releases each month which a glimpse into the underlying health of each individual economy and therefore can help traders form an opinion on currency direction.
Some of the most important indicators that can be of use in Forex for beginners are Inflation, GDP, Unemployment and Interest Rate decisions. These news events are key focal points for markets and have the power to cause dramatic moves, typically when markets are taken by surprise by an unexpected reading. To keep abreast of the key news releases each today as well as all the key economic developments affecting the major currency pairs you should follow our London & New York Forex reports which give you the crucial macro developments affecting markets as well as providing a look at the technical landscape. You can also keep track of the key economic events this week, using our Forex economic calendar on our Home page.
Technical analysis is a very popular area of Forex for beginners, typically because the perception is that it easier to understand than the shifting nuances of applied market economics and also because there are traders, both manual and systems based, who have successfully applied technical strategies. Technical concerns the study of price charts with a view to identify repeatable scenarios and patterns which can then be exploited in the future. The foundation of classic technical analysis relies on
The foundation of classic technical analysis relies on candle stick reading, applying trend lines and identifying price patterns and the use of technical tools such as Fibonacci Retracement/extension and or technical indicators such as stochastics, RSI, MACD and others. A large part of the trading and analysis we provide here at Littlefish FX is focused on the technical aspect of Forex for beginners. Grounding one’s understanding of currency movements in a macro context can be useful for risk management and helping to avoid unnecessary losses around key news events but for the most part we focus our trading on the use of technical strategies. We also provide a range of our own simple Forex indicators such as Order Flow Trader and our Psych indicator within our Forex Trading Course, which feature in a lot of the educational material we have on the website.
One of the key areas that is usually not talked about much in terms of Forex for beginners is the idea of sentiment. There is an asymmetrical informational balance in forex trading which can make it difficult for beginners to get on the right side of the market as bank and large institutions have access to order flow information which can help them make decisions whereas independent retail traders do not. However, independent traders can access some positioning data which can provide insight into market sentiment and be very useful as a guide for making trading decisions.
The CFTC publish a weekly Commitment of Traders report noting institutional positioning in the currency markets which informs traders of whether institutions are bearish/bullish and to what extent. This information has clear benefits for retail traders looking to trade in line with institutional players.
Looking to build a solid understanding of each of these three key elements and learning to properly combine them in your analysis can truly expedite your learning process and whilst Forex for beginners can appear quite a daunting landscape here at Littlefish FX we don’t think it needs to be and are always on hand to answer questions and offer guidance.
If you’re interested in Forex trading and would like to learn more about the indicators, check out our article on simple forex indicators here.