How to earn money in Forex

by John Arnold

The main target for any trader is to make a profit when given the opportunity and the same applies to the traders of the foreign exchange market.

The trader earns money utilizing the forex market. Forex trading is basically simple buying or selling of currency pairs or purchasing that track the movement of specific currency pairs. The currency pairs usually consists of two prices, quoted as a ask price and a bid price. A trader can earn money by bidding the right price and selling at the right price.

As in any other market the forex market is also governed by many factors ranging from economic conditions, political scenarios and market psychology. A knowledgeable trader knows how to earn money by following certain trends, understanding technical analysis, predicting the market movement and invest or sell based on the information.

One important aspect to remember is that as in share market, it is better to think of a long term investment. Trade with a higher time frame and earn better profits! Forex is not easy money or a Get-Rich Quick Scheme. Forex trading is a disciplined emotion free trading, with emphasis on long term, well researched money management.

All the forex brokerage firms provide forex trade signals, analysis of various markets and forex news to the trader. The forex trade signals gives clear indications on what the traders need s to do to make a profit while the forex technical analysis gives in-depth analysis of the movement of prices over a period of time, thus giving a prediction based on past history. It also gives trends of various markets like oil, and precious metals etc. which in turn affects the performance of the forex market. Keeping a track of the forex technical analysis is essential to ensure that the market trends are followed, which in turn ensures wise decision making during investment and choice of lot size.

The forex technical analysis follows the rules of statistics and is normally depicted with various forms of chart, may it be line, bar or candlestick. The data collected would range from daily to weekly closing price which is then depicted in a line chart, to show the general movement of the price over a time frame. The bar chart shows both the opening and closing prices along with the high and the low prices over a time frame. The bar chart used in the technical analysis is very specific the top of the bar indicates the highest price paid, while the bottom indicates the lowest price paid. A horizontal left hash indicates the opening price and a horizontal right hash indicates the closing price while the whole bar chart indicates the complete range over the time period selected. The candlestick chart is in many ways similar to the bar chart.

Another important source that a trader needs to keep track of is the forex news. The forex news is important as it provides the existent conditions of the market along with analysis of the market. The forex news gives a worldwide view of the economic conditions, political atmospheres and even provides analysis of the market sentiments on that particular day.

The news gathers information from all forex markets and presents it in a consolidated form for a trader to decide on the investments.

Any trader should ensure to have knowledge of both technical as well as fundamental analysis, and then trade in the forex market. It is better to be cautious. In forex trading, it is important to pick the correct trading method and have a perfect trading planning. Another precaution would be, not to use full leverage plan and to have clear money management with profit and stop loss plan according to the investment.

While the forex technical analysis can give a picture on how the prices may move based on historical data, the forex news gives a real time view of the events happening at the moment. A wise trader uses the information gained from all sources to buy or sell in the forex market and thus makes money in the forex market.

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