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Fundamental Analysis based on Economics

Analysis similar to the stock market, traders in the foreign exchange market, relying on two forms: technical analysis and fundamental analysis. The same stock technical analysis in the foreign exchange market, through the analysis of charts and indicators. Fundamental analysis is a bit different – at the same time the company financial statement analysis, indicators of the country’s economic report and analysis, there is a large.

In order to analyze how much do you think a country’s currency is worth it, you need to assess the country’s economic situation, in order to be more effective monetary transaction. In this section, we will look at some of the major economic reports to help traders learn the economic situation of a country.

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How to read a currency pair quote

Typically, the new investors in the foreign exchange market are confused about currency price quotes. In this section, we will take a look at the currency quote to see how they work in currency trading.


Read quotes

When you see the currency quotes, you will find that all currency quotes are in pairs – for example, USD / JPY, CAD / JPY. This is because when you buy a currency, you are selling a different. A sample of foreign exchange quotations in U.S. dollars (USD), Japanese Yen (JPY) looks like this:

USD / JPY = 101.30

This is the standard format for the currency pair. In this example, the left side of the slash of the currency (USD) is known as the base currency, the currency in the right (JPY) called the offer or counter currency. Remember, this is very important. The base currency (in this case, the dollar) is always equal to 1 unit (in this case, the U.S. $ 1), and the quoted currency is the equivalent in other currencies (yen).
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More about Currencies

The majority of foreign exchange transactions are mainly concentrated in the world’s major financial centers such as Tokyo, London, New York and Tokyo. The average daily trading volume in these markets is more than $ 2 to $ 3 trillion! Under normal circumstances, a lot by the central banks, hedge funds, institutional investors and large enterprises in the foreign exchange market activity. But success in this market do not depend on you how much – it depends on how well you the basics, you have good judgment, and a lot of hard work and common sense. This section will introduce you to the major currencies on the foreign exchange market.
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Trading Currency

The foreign exchange market (referred to as Forex or FX) is one of the largest, most exciting, one of the fastest growing markets in the rhythm. This seems to be more readily understood, compared with the stock market. Chances are you have tried, when you travel to another country, and exchanged some money.

Traditionally, only large financial institutions, central banks, hedge funds and extremely wealthy people have enough resources to participate in the foreign exchange market. Now, however, with the emergence and spread of the Internet and mainstream computing technology, it is possible for the average investor to buy and sell currencies click of a mouse from the comfort of their homes.
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Why you should use a Stop Loss

Stop loss orders are highly recommended because they are easy to use and helps protect the trader from excessive risk taking and losses.

What is it?

Stop loss order is an order gets executed to buy or sell once the asset reaches the preset price. The key usage of this is to reduce the amount of loss on a position.

Suppose you bought 1 micro lot of GBP/USD at 1.5810. According to your risk management strategy, you may place a stop loss at 1.5800. If market moves against you and price drops to 1.5800, this order gets activated and the brokerage will sell your lot at the current market price. This may or may not be 1.5800, but it should be close, barring extremely volatile conditions.

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Forex robots – do you need one

Many forex investors are increasingly looking to forex robots for signals and automation purposes. In spite of its many functionalities, you must decide for yourself if you need one and how best to utilise it.

What is it?

Forex robots are forex trading software that helps the trader automate trading decisions based on preconfigured algorithms. They generate signals and can even enter and manage the trades.


Why do traders use it?

Traders with simple, straight-forward strategies can simply program it in the forex robot for it to trade automatically, even 24-hours, as long as the market stays open. There is no need for human intervention and the excess time can be better used in other forms of forex analysis and research.

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Scalping – is it for you

The more you trade in forex, do you know what kind of trader you are? There are mainly 4 types of traders – scalper, day trader, swing trader, and position trader. Here, we will explore a greatly popular style called scalping.

What is it?

Scalping is a technique that requires the trader to enter and exit the positions very quickly, generally within 3-5 minutes and as quickly as 1 minute.

Scalping has gained in popularity because this style is being seen as a safer way to trade forex. Because the positions are only open for a very short period of time, the exposure to market movements is much less than the conventional trading methods.


How does it work?

This technique works by riding on the short periods of volatility. Since the market risk is low, it also means the returns are low too. Scalpers trade very frequently to make up for the small returns per trade. They trade potential high returns from long trend runs for smaller but more frequent gains.  For example, if a scalper buys 100,000 units of GBP/USD which gains 3 pips before the position is quickly closed, the gain is only $30.

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