HOW A PERFECT FOREX MARKET PREDICTION CAN MAKE YOU A BETTER TRADER?
The Forex market is another form of the foreign exchange market. It is the process of exchanging a currency into other currency for several reasons, might be for trading, or tour. According to some recent reports from the Bank for International institutes, the turnover of the Forex market is currently at more than $5.1 trillion.
In the next section, we will see the basics of the Forex market including the elements of it. Therefore, you would know how overall activity in this market occurs and how you can make a benefit from the foreign exchange market.
Each and every country maintains its currency. When people exchange their own currency with another currency it is called Foreign Exchange.
From the very beginning of its establishment, it has experienced a great deal of change.
The Supply-demand and relative value of a currency are responsible for the exchange rate. With the fall of the Soviet Union in 1991 and with the growth of Asia and Latin America world economy has changed so does the exchange rate.
With the advantage of globalization, the world has become a more border less market which is more interrelated.
- Economic Growth
- Unexpected News like Natural disasters and political instability
- Recreation and depreciation
If you want to pay a visit to a foreign country, you need to convert your currency to that currency. You spend the money there and come back when you convert it again by the time you gain or lose some money which causes can be attributed to the exchange rate.
The most important question is how we can trade in Forex and what underlying brisk is associated with it.
Trading in the Forex market is done by the brokerage house. If you anticipate that the price might go up you can invest in call and when the value increases you can sale.
If you Google on the internet you will find that Forex is a very risky business. But if you take proper precaution you can minimize your risk.
There are certain states of skills and strategies you might follow to minimize the risks. For example:
- Planning and
Risk Management Strategies To Predict The Forex Market
Sometime you will see the best Forex traders lose money while as a newcomer you might make some money but it is always better to follow the risk management strategy to predict the Forex market.
#1 Guard your Investment:
You can use tools like Stop loss, if/then, Cancel Order (OCO), etc.
#2 Set proper Levels:
People say how you set your stop-loss that is an art. You should set your trade-in such a way that it can manage the jumps and drops in price to protect you from further loss.
If a STOP that is too narrow may expose you to the market again. It might cause more damage to your investment.
#3 Emotional Engagement:
Sometimes you do lots of research but still you incur a loss in the market because sometimes it is not dependent on research rather it is dependent on your emotion, mindset and time.
#4 Economic Releases
Setting a good trading plan is very difficult which lies in the way of your trading success. Setting a good trading strategy sets your trading behaviors.
You also have to prepare a plan for what you will do if the trading does not go well.
#5 LINE CHARTS:
In Forex line chart is very commonly used. At one glance you can have an idea in price movement.
#6 BAR and CANDLESTICK Chart to predict the Forex market.
Bar and candlestick charts provide an easy way to understand the price patterns. Each bar or candle on the chart is defined by four price points like
- Open and
Enter your text here…The length of the bar or candle signifies the range of trading activity for a specified time range.
For example, on a chart with a ten-minute time scale, a bar or candle
#7 Technical analysis to predict the Forex market:
It is the study of repeating patterns and movements in the market caused by the pattern-like behavior of traders.
Traders use technical analysis to monitor the current and historical price movements of a currency pair, help determine market trends and forecast potential entry and exit points for their trades.
To trade in the forex market we use Technical Analysis. In Technical Analysis we follow the movement of the market. Traders use the historical price of the currency.
They try to determine the market movement and the possible entry and exit points. Enter your text here…
#8 Predict Forex through Fundamental analysis?
In fundamental analysis, you consider Social, Political, Economic factors and try to find a correlation with price movement means you want to see, if there is social instability then how the price goes up or down.
Price movement also depends on sudden news, interest rate changes, government decisions, and other events.
Many new traders try to develop the skill of Fundamental analysis following news events and scheduled economic announcements. But you would find a situation where fundamental analysis does not work as you thought.
There comes the importance of technical analysis. In technical analysis, traders use different analytical tools and strategies. So few popular tools are given below.
#9 Predict the Forex market using support and resistance:
These two points are ranges where the market constantly hit and then reverses its directions.
Support is a place where the price goes and bounce back.
On the other hand, resistance is a place where the price gets back.
#10 Machine Learning:
Foreign Currency Exchange market which in short is known as Forex. It is an extremely volatile complex market as a result of predicting the daily trend is a challenge and most of the time you will find 95% lose their money in this business.
Because they do not have any knowledge of trading they just follow the other people but sometimes experienced people incur a big loss.
So expert tries to develop a computer system that can predict the Forex market which is known as Machine Learning. ML themes include
- Reinforcement learning
- Optimization methods
- Recurrent and state
- Space models
- On-line algorithms
- Evolutionary computing
- Kernel methods
- Bayesian estimation
- Neural nets
- Boosting, and
- Multi-agent simulation.
Forex market prediction is one of the most challenging and daunting tasks because the exchange rate is typically raucous, non-standing and highly muddled in nature One general assumption works about machine learning is historical data incorporate all the factors.
People use computer programs and robots which use historical data and technical analysis but the market does not follow the repetitive old pattern always.
There are other constants which machines cannot take into account, for example, political events, micro, macroeconomic events, social changes, etc. So we cannot depend completely depend on the machine.
Sometime you might study a lot but on trading, it might be of no use just your mindset will work. So you have to study a lot and also have to be very careful regarding your surroundings.