What is the Best Way to Learn Forex?
Way to Learn Forex
There are many paid and free online tools available on the internet from where I can learn Forex trading.
However, it is important to understand the content that most of the education service providers are offering.
Forex trading is a complete method of learning, execution, and management of trades.
Therefore, whatever Institute or platform you choose for trading it should include all of these in their strategy.
In the Forex market, there are thousands of trading strategies in the world. You should identify which trading strategy suits you best. If you want to take trading as a full-time profession you should focus on scalping and day trading methods.
On the other hand, if you want to choose it as a part-time passive income you can focus on swing trading and position trading.
The types of trades there are several methods of trading that need to consider.
Some traders like indicator based trading while some traders choose to trade in the naked chart. Considering these we will see what a good trading strategy should include:
Trading indicators are tools that calculate the past movement and predict future movement.
There are many indicators in the world.
In MetaTrader 4 trading platform there are 30 built-in trading indicators while in MetaTrader 5 there are 36. If you want to focus on trading you should know all out the built-in trading indicators.
Whether you follow or not you should know this trading indicator as it will help you to understand the market.
Every trading indicator has a unique calculating method that produces possibilities of upcoming movement. If you learn about indicators you would know how they formed and what calculation they used.
Later on, if you want to build a trading system using indicators, you can focus on the specific indicator in depth.
Technical analysis is an integrated part of Forex trading.
However, it produces good trade signals in most of the financial market including Forex cryptocurrency stocks and indices.
There are many successful traders in the world who trade based on technical analysis only. However, some traders use technical analysis as a method to enter the trade beside their own trading strategy.
Technical analysis uses the geometric formation of the price and some basic indicators and tools like Fibonacci, Gann, etc.
When price moves it creates some formation in the candlestick chart that helps traders to predict the upcoming movement.
For example, there are some significant support and resistance levels created in the price. These levels work as a potential market reversal zone as institutional traders use these levels to intraday trade.
When the market breaks above or below these levels it creates a massive movement.
Therefore, the technical analysis will help you to predict the upcoming movement by measuring the speed of the breakout and direction of the breakout.
Whether you trade based on technical analysis or not, you should know at least some technical analysis method which includes
- Support and resistance
- Market context
- Pivot points
- Ichimoku Kinko Hyo
- Supply and demand zone
- Moving average
Like technical analysis fundamental analysis is also important in the Forex market as most of the professional and institutional Forex traders take their trades based on fundamental analysis.
Forex market is driven by central banks by changing the interest rate. Therefore, traders who understand the impact of interest rate change in currency pairs can make a decent profit without knowing any other concepts.
Furthermore, there are other tools in the fundamental analysis that are important to evaluate a country’s economy.
In the Forex market, traders usually identify the weaker economy versus the strongest economy and take trades towards the strongest one.
In fundamental analysis, traders usually identify the stronger and weak economy by measuring several fundamental releases as mentioned below
- Interest rates
- Gross Domestic Product
- Consumer price index
- Producer price index
- Retail sales
- Export and import
- Foreign currency Reserves
If you want to create a trading strategy using fundamental analysis you should know the concept that is mentioned above and what happened to the current price if one of the above-mentioned data changes.
Fundamental analysis is more tricky than technical analysis as it requires in the knowledge of the economy and financial sector.
Therefore, if you are interested in knowing the economy you should focus on a trading method that includes fundamental analysis.
In the above section, we have seen the best way to learn Forex trading.
Considering the elements of trading let’s summarize what a trader should learn to trade in the Forex market.
- Technical analysis
- Fundamental analysis
- Money management
- Trade management
- Trading psychology
If you are new in trading it would be confusing to see money management and trade management as a part of learning Forex.
However, these things are very important as it is followed by most of the successful Forex traders.
In the Forex market, there are some uncertainties that no one can avoid. There are no trading strategies that can assure you a 100% profit.
Therefore, it is important to understand how to minimize the loss and how to make a maximum benefit with a minimum risk.
There is no alternative to having a strong money management tool and risk management tool. whether you trade based on the technical and fundamental analysis you should understand the appropriate stop loss and take an appropriate level from where you will get out of the market.