All information about forex system, forex strategy, forex demo and others

The old battlefields of the middle ages are not gone, they have merely changed form. Hundreds of years ago normal men would set out to build their empires by conquering lands through the force of arms. Today, normal men like you and i set out to build our financial empires by conquering markets throught the force of self. The blood soaked battlefields of yesterday have prefabricated way for the cash soaked commercial battlefields of today, with the massive private armies of Family warlords making way for massive pools of  family capital. Just as armies were needed to shape empires of the past, so too is capital needed this day in order to place modern commercial plans of conquest into action.

In there, lies the reason as to why many forex traders fail. They go into effort risking too many soldiers (capital) and without the knowledge of tactics needed to win the fight.

Lets look at that again. 1. They risk too much capital, 2. They do not comprehend Forex markets.

Many traders both successful and miserable have prefabricated these mistakes, the main reason for me writing this article is so you can learn this lesson here and do not have to make this mistake and lose money, or at the very least be cautious enough to minimise your losses.

No general will risk a majority of his men in a effort that he has no plan for and where he has no intent about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.

1. Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses.

2. Educate yourself so you can discern your chance to strike but also discern when it is neccessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months.

So in summary only risk 1% of your capital in any trade, and educate yourself about how forex markets work.

If you are new to forex trading you have access to a lot of fundamental analysis as the click of a mouse from banks brokers and news wires you can look at and trade upon it – let’s look at forex fundamental analysis and how to use it.

A forex trader, who makes trades based upon fundamental analysis, will look at the supply and demand situation in relation to the currency studied, and try and predict the impact of the various factors on its movement and they include:

• Economic growth and economic policy

• Interest rate outlook

• Balance of payments

• Employment

• Trade deficit

• Political Factors

To study but a few but there is a problem when trying to use fundamental analysis:

The facts are there for all to see but price is finally decided by millions of different views such as you and me and we all draw our own conclusions from the facts and numbers. Furthermore all the news is acquirable in seconds anywhere and this means it is discounted.

With human nature involved and the fact that fundamental analysis is swiftly discounted it is nearly impossible for the novice trader to execute trading signals on.

If you want a graphic example of how forex fundamental analysis won’t help you make money think about this fact:

The ratio of winners to losers is the same this day as it was 50 years ago and this is despite superior news more of it and faster communications. So if you are thinking of trading it think again.

A far easier way is to study charts and use technical analysis.

A technical approach takes into statement both the supply and demand situation, as well as investor psychology. We can see the impact of both at once and reflected in the price.

Many traders don’t believe that technical analysis works, as it can’t take into statement the fundamentals but this is not correct:

Technical analysis assumes that all known fundamentals are going to show up instantly in price action. Technical analysis therefore is simply a short cut way of taking into statement the fundamentals and more importantly takes into statement human psychology.

The equation for market movement is:

Supply and demand factors + Human perception (investor psychology) = Price action

So if you are thinking of trading using forex fundamental analysis, you can save yourself a lot of time and increase your chances of success, by taking a technical approach – that reflects ALL the factors that influence price and increase your odds of success.

With technical analysis you act on the reality of price – not views and therefore trade the truth and not what you or anyone else thinks it might be.