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Predicting Market Movements In Forex Positions


Accurate forecasting of short-term forex movements can be done. However, forecasts of longer term prices are a fool’s errand. Forex represents one of the largest capital markets in the world – a market where almost 100 currency pairs are traded around the clock by everyone from European Central Bank to the housewife next door. In such an environment, be happy trying to identify a trend that you can successful trade. Indeed, there are enough indicators available to ably assist you in such an endeavour. If you want to, stick to well known Western indicators like “MACD” (“Moving Average Convergence/Divergence”) for trend confirmation and “Parabolic SAR” to help you get out at the right moment. Or, go Asian, and use an “Ichimoku cloud” to identify when to get in and when to get out.

Do not forget that the more research you do, the savvier of a trader you will become. Beginners have trouble with “market noise”. Research clears away the mayhem so that you can actually hear the chorus.

How Forex Markets Move And Change

Given the complexity of the world’s forex markets, it is best if you concentrate on one or two forex currency pairs, learning how they move in the major regional markets (i. e., the European trading session, the North American trading session and the Asian trading session) and what kind of reports (or events) tend to move them. No two currency pairs are alike. The good news is that many currencies have a tendency to do the same thing again and again. For instance, at the end of every month, the European Union gives the UK a large refund which must be changed into British pounds (GBP), so selling EUR/GBP – at the end of any month – is almost a “no brainer” trade.

Forecasting The Future In Forex Markets

Forecasting too far into the future of any forex market is foolhardy. There are simply too many interacting variables to attain any degree of accuracy and no one knows how liquid any forex market will be in the future. Short-term price forecasting in forex, on the other hand, is doable and there are many indicators available to help you along these lines. For instance, you can use the “Chikou Span” of an “Ichimoku cloud” to tell you when to enter into an upward trend (or sell into a downward trend), while you can use a “Parabolic SAR” to help you identify the ending of a trend. Use “MACD” (“Moving Average Convergence/Divergence”) for trend confirmation and Bollinger Bands to measure volatility.

Using Analysis To Prompt Forex Trading Signals

In forex, knowledge is power and research is the way to acquire that knowledge. Knowing as much as possible about the currency pairs that you want to trade can reduce the risk of error substantially and should increase your profitability. Realising how markets usually react to certain news items sounds stupid, but can be very helpful. For instance, given the way that Australia’s export economy is tied into China’s industrial system, any time there is a shiver in China’s gross national product numbers, the Australian dollar (particularly the AUS/USD) usually catches a cold. Similarly, the monthly American “ISM” (“Institute for Supply Management”) report usually can tell you which way the next, very forex-trade-critical, US Government, “non-farm payroll” report is headed.





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