Forex market is a global marketplace for currency exchange that is conducted globally over the counter. As the market remains open for five week days, 24 hour a day, in different time zones in different time financial centers like London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney, there are some major intricacies in trading in this market. Besides business related intricacies the Forex market is too volatile in nature. This is the reason Forex trading needs some special inputs for running the whole business successfully.
Despite super volatility of the market, there are certain basic rules of Forex trading. It is expected that these time tasted formula for Forex Trading works fine with all type of markets, regardless it is a hot market or its running dull and uneventful. Developing a specific forex strategy is the best part of running this business with optimum money management and clear planning where to invest money and how much leverage of the market is to exploit for procuring standard profit out of the dealing. It is mostly observed that forex trading without a proven trading strategy often creates messy situation.
It is always recommended to trade in Forex market according to the running trend
Depending on the trading time frame, it is globally, monthly, or daily trading trend. The Forex market runs in either flat or in a particular trend and it is always wise to run the business in that specific direction only. In the flat market a Forex trader can enjoy the privilege of doing business in both the directions of currency trading being in the channel.
In Forex market every trader maintains their entry and exit time points. There are certain specific times available for each of the currency markets opening; according to different open and closing time of market a few hours are available when a trader may find two Forex markets are running. These hours are called over lapping hours and trading in these overlapping hours is the best time for the traders for procuring quality profits out of their currency selling and purchase. Before entering the stock market a trader must select a larger time frame so that he can get to enjoy the best profit with minimum chance to be in loss. It is always good for checking daily timeframe, so that by any means the trader does not plan/run his Forex trade against the current monthly trend.
It should be work according to formula for best time for exit and entrance. For example if a trader decides to work on H1 chart it is wise to use M15 chart for finding the best entry and exit points. In case one trader does his trading based on daily charts, it is wise to find H1 chart for finding best suitable exit and entrance points.
Risk management is one of the prime driving issues of running Forex business; for the beginners it’s a great issue because of the unpredictable market condition. As a general norm, a Forex trader must not risk more than 5% loss per trade at the most. Use of Forex signal is the best way for implementing best level of risk management for running the market smoothly. Controlling personal fear, greed, and personal choice may not work properly for risk management; however, there is a fine line between instinct and speculation, and market instinct often works excellent for Forex business related risk management.
It is always safe to accept and operate on Forex trade signal on the profit and loss ratio with 2:1. For example, when a currency price movement is predicted it is always good to predict loss and profit target. It is never safe to enter a market with less than 2 profit and loss ratio as at the most traders can successfully predict up to 60% of price fluctuation, etc.
For Forex Trading the day of week matters most. Forex traders always prefer to trade in the peak hours of the market, never in its low hours or at the time when most of the traders are closing their deals. Although nothing is in writing about these norms, but it is often seen that Mondays are tend to be volatile and flatty and Friday market is in general too unstable and most of the traders close their weekly transaction on that day. It is always good to start trading on the suggestion of Forex financial experts to enjoy the leverage of active and productive market.
Besides knowing the right hour, it is also necessary to know the active marketing hour for the target currency pair. For example, GBP/USD market remains at its peak when New York and London sessions do overlap between the time span of 8:00am and 11:00 am EST. Forex traders with target currency for GBP/USD target this hours for bagging best deal. Similarly, AUD/JPY currency trading reaches at its peak when Tokyo and Sydney sessions do overlap between 7:00pm and 12:00am EST.
It is good to start a with Forex mini account with approximately $1,000 USD: once a trader get to know the trend and tricks of maneuvering Forex market, then it’s time for him/her to approach the Forex with more aggressiveness