© Rio Financial Group 2006 2
are using, it is always the KISS principle (Keep It Simple). So if you are looking forcomplicated systems and complicated answers skip this book.However, if you are looking for some simple pieces to the puzzle that hopefully will take you tothe next level then read on.
If you are a moderately experienced or experienced trader, skip thefirst part. It is boring but necessary for those just starting.
When it comes to successful Forex trading, there are two basic strategies used by the majorityof traders: fundamental analysis and technical analysis.
In fundamental analysis, Forex traders look for causes that might trigger market fluctuations.These may include political activities, financial policies, growth rates and other factors.As you can imagine, fundamental analysis of the Forex market can be fairly difficult. For thatreason, most traders use fundamental analysis only to predict long-term trends.But a few use fundamental analysis for short-term trades. They review different currency valueindicators that are released several times throughout the day, such as: Consumer Price Index Purchasing Managers Index
Non-farm Payrolls (the mother of all Fundamental Announcements)
Retail Sales Durable GoodsIn addition, there are meetings held that provide quotes and commentary which may affectmarkets. These meetings, such as those of the Federal Trade Commission, Federal OpenMarket Committee, and Humphrey Hawkins Hearings, often discuss interest rates, inflation andother issues that have the ability to affect currency values.Examining the meeting reports and commentary can help Forex fundamental analysts to betterunderstand long-term market trends, and also allow short-term traders to profit fromimportant activities and events.If you decide to follow a fundamental analysis strategy, be sure to keep an economic calendarthat shows when these reports are released. Your broker may also be able to provide you withreal-time access to this kind of information via the internet.
The more popular strategy for Forex traders is the technical analysis.Technical analysis of Forex trading includes the use of graphs, charts and other methods of measuring past data tosee the indication of the rise and fall of currencies.In other words, to spot trends.This is similar to technical analysis for equity trading, except for the timeframe--Forex marketsare open 24 hours a day. Because of this, some forms of technical analysis that factor in timemust be modified so they will work with the 24-hour Forex market.
Note: this e-book is for those interested in TECHNICAL ANALYSIS. Fundamentalanalysis is for the BIG institutional trader and is not addressed in this e-book.