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A Practical Approach to Trading Currencies

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A Practical Approach to Trading Currencies

Sometimes in trying to make money trading currencies it is all too easy to put the cart before the horse. That is to say when looking for profitable approaches to trading currencies, we get involved in too many details and lose sight of the big picture. Whether we end up with a conservative approach or an aggressive approach, fundamental trading or trading based on technical analysis, a practical approach to trading currencies will more likely end up making money.

Practical: realistic, down-to-earth, sensible, levelheaded, pragmatic, rational, businesslike.

A Fundamental Approach

The first and most essential part of a practical approach to trading currencies is understanding Forex fundamentals. No matter how skilled a currency trader may be in reading market sentiment with technical analysis tools, a Forex trader who understands the fundamentals knows where the market is eventually going. Understanding Forex fundamentals is a twofold process. There are solid facts and figures that are essential for fundamental analysis in foreign currency trading. These are balance of payments, cash reserves or debt, and employment figures. Less tangible but equally important to understanding Forex fundamentals are national politics, trade policy, monetary policy, and central bank pronouncements and stated policy. What may seem to be a small change in national monetary policy may lead to substantial changes in so called solid factors such as balance of payments, employment, and national debt or currency reserves.
Understanding Market Sentiment and How Crazy It Can get!

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  • 1. A Practical Approach to Trading CurrenciesBy www.theforexnittygritty.com
  • 2. Sometimes in trying to makemoney trading currencies it is all too easy to put the cart before the horse.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 3. That is to say when looking for profitable approaches to trading currencies, http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 4. we get involved in too manydetails and lose sight of the big picture.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 5. Whether we end up with aconservative approach or an aggressive approach,http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 6. fundamental trading or trading based on technical analysis, a practical approachto trading currencies will more likely end up making money. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 7. Practical: realistic, down-to-earth, sensible, levelheaded, pragmatic, rational, businesslike.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 8. A Fundamental Approachhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 9. The first and most essentialpart of a practical approach to trading currencies is understanding Forex fundamentals. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 10. No matter how skilled a currency trader may be in reading market sentiment with technical analysishttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 11. tools, a Forex trader whounderstands the fundamentals knows where the market is eventually going. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 12. Understanding Forex fundamentals is a twofold process.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 13. There are solid facts andfigures that are essential for fundamental analysis in foreign currency trading.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 14. These are balance of payments, cash reserves or debt, and employment figures.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 15. Less tangible but equallyimportant to understanding Forex fundamentals are national politics,http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 16. trade policy, monetary policy, and central bankpronouncements and stated policy.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 17. What may seem to be a smallchange in national monetarypolicy may lead to substantialhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 18. changes in so called solid factors such as balance ofpayments, employment, and national debt or currency reserves.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 19. Understanding MarketSentiment and How Crazy It Can get!http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 20. The famous baseball pitcher was criticized for holding theball in his hand for a long time before pitching it. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 21. His response was that the batter could not hit the ballwhen it was his, the pitcher’s, hand.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 22. Likewise you will not lose money if you don’tunderstand the market and do not trade. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 23. A practical approach totrading currencies is to onlytrade when you have a clear understanding ofhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 24. current market sentiment along with a clear understanding of wherefundamentals will eventually take a currency pair.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 25. Technical Forex trading succeeds when it takes advantage of what are typically short term market efficiencies but it pays evenhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 26. better when the market is really excited or depressed and prices are way out of kilter.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 27. Although major currencies are typically not as volatile as minor currencies, they trade in high volume and high liquidity. http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 28. These attributes are positives for technical Forex trading.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 29. A trader can spot marketturnarounds when the overall market seems confused.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 30. Using basic technical analysistools a trader of major Forexcurrencies can make moneyhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 31. day in and day out by simply following the sense of the market and trading accordingly.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 32. Knowing When to Trade and When to Quithttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 33. If you are not using a lot of trading capital, a practicalapproach to trading currencies http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 34. may be to make riskier than usual trades in search of making huge profits.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 35. Aggressive Forex trading hasits place as does conservative Forex trading.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 36. It is a practical approach totrading currencies to limit theamount of capital invested in riskyhttp://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies
  • 37. trades and concentrate the bulk of trading capital ontrades in the ninety percent win category.http://www.theforexnittygritty.com/forex/a-practical-approach-to-trading-currencies