The absolute best training for you when you’re new to forex is a course on technical analysis (Peter’s course is the best.) And the heart and soul of technical analysis is the price action charts. Price charts give you insight into the collective mind of other currencies traders. They graphical represent trends and flows that would otherwise not be seen if you were merely keeping tabs on a data feed. It doesn’t matter if you trade options, stocks, commodities or currencies, if you are not trading with charts you are trading at a disadvantage.
Unfortunately, most people attempt to interpret stock charts without getting the vital training that they need. That is why a forex training course that goes over technical analysis in detail is so important. Even if you have already read the forex tutorials for beginners, you still need to go through a complete course on technical analysis so that you have a vital foundation on which to build your trading career. Even advanced traders need to keep abreast of the latest tools as mastering technical analysis is a life-long ambition.
The first thing that you need to know is that technical analysis isn’t a crystal ball that predicts the future. Instead, it is a collection of tools that traders use to immediately size up current trading conditions and help an investor decide when to enter a trade, when to exit a trade or when to not trade at all.
Specifically, here is what technical analysis can tell you:
1. When to sell or buy, depending on your tolerance of risk and style of trading.
2. What is a good price (value) for a particular currency pair.
3. Which currency pairs are forming favorable conditions for your trading method.
4. What is the best place for your stop loss relative to the price action.
5. Whether or not current volatility of price movement is sustainable, for how long that particular trend will continue, and if a reversal of trend is near.
6. When to close out your trade based on your trading strategy and financial objectives.
7. Which type of trader is currently dominating the market, the bears or the bulls.
8. When you are approaching significant lines of support or resistance.
9. When an economic event bucks the current trend.
10. When a major price trend has come to an end.
Forex will be less of a gamble if you understand the components of a price chart. A price chart consists of nothing more than time and price. A stock chart is a little different because it has a third component, volume. Forex charts do not because currencies are traded globally as opposed to a central stock exchange. The most significant chart out of all the time frames is the daily chart. Because it is so widely traded, you should pay heed when price action approaches daily indicators.
For the best technical analysis setup you will need a set of dissimilar indicators that should include:
1. Trend strength or weakness indicators, trend directional indicators and overall trend.
2. Oscillators that will show oversold or overbought conditions which track along moments of consolidation and give early breakout signals.
3. Indicators that illustrate Accumulation and Distribution cycles which give insight as to how the market movers are leading the current trend.
4. Indicators that give Divergence and Convergence signals so you can anticipate a reversal of trend direction.
5. Tools that show expansion or compression of price patterns in a cyclical fashion.
Whether or not you have assets in the financial markets, technical analysis is a vital skill now more than ever. Technical charts give us an illustration of what has happened before and what is currently taking place. All of this information in a graphical format helps investors and traders anticipate what is to come.
When you begin your forex course trading should only occur after you have finished it. A currency trading tutorial is not enough. As your skill with charts and analysis becomes more proficient you will be able to develop a trading style and risk management system that will allow you to achieve your trading objectives. No longer will you have to pester someone for a stock tip.
By studying the historical data and the current data you will be able to spot reoccurring trends and consistent buy signals that you were blind to before. With technical analysis you’ll be able to improve your market timing and either go with the flow of the trend or get in at the bottom or sell at the top. That is how to make money with forex.
Get Peter Bain’s course if you want master technical analysis.
