Algorithms For Trading — All That You Need To Know About Trading To Succeed
Forex trading, initially, may sound a bit too technical, or something related solely to business, because of the word “trading” involved in it. But once you get to understand what forex actually means, you will be surprised to realize how simple and yet complicated at the same time the industry is. Forex comes from the words foreign and exchange, and is an essential part of any country’s overall economy. This is a trade that allows exchange of currencies from one country to another. This business is carried out by investment companies, and banks, but you can, as an individual, do it too on the side. One can work as a forex broker, provided he knows the ins and outs of the financial market.
Forex trading is often done by credited brokers; although sometimes, people from the black market also do buying and selling of the currencies. In forex trading, a currency is exchanged for another currency depending on the current conversion rate. For instance, if you have an American dollar and you need Euros for a business trip, you are going to have your dollars converted to the Euro. This transaction is forex trading.
One can make money from forex trading by buying currencies for low prices and then selling them off for a much higher price. That said, there is a trick the forex trader should know here. Which is, to know when a currency will depreciate or fall in value so that the trader can buy it, and also to know when the value of the same currency will rise so that he/she can sell it off? This buying and selling is very much similar to the trading of stocks except that here, you are dealing with cash.
This gives forex trading an advantage over stock trading in the sense that your money has higher liquidity. This means that it will be easier for you to use it when you need it because it is in a money format unlike with stocks, which are in certificates. It is also much harder to sell stocks of companies than currencies because currencies are needed unlike company stocks, which are only needed when you want an investment.
Now, coming to the types, there are two primary times of forex trading strategies that one can observe in the financial market. While one of these strategies is based on fundamental analysis, the other on is based on technical analysis, and as a forex trader, one would need to integrate both of these strategies in the complete forex trading system.
The first primary type of forex trading strategies is fundamental analysis and this trading technique pertains to the economic and political conditions that may affect the currency prices. Forex traders use fundamental analysis to research information about economic policies, inflation, growth rates and unemployment rates. Traders accomplish this by using news reports about the areas where the currency they will be trading on. This information helps to provide a big picture of the economic conditions that will affect specific currencies. When dealing with fundamental analysis you will come to learn that the two more important fundamental indicators are international trade and interest rates. Other indicators will include, Durable Goods Order, Producer Price Index, Consumer Price Index, Purchasing Managers Index, and retail sales.
The second primary type of forex trading strategies is technical analysis. Technical trading actually takes into account the fundamentals. Technical analysis also factors in the greed and the fear of the people who will influence currency prices. Technical analysis looks at both inputs that make up the price, simply looking at the forex charts and lets that tell them where to execute their trading signals. When traders use technicalities for plotting the entry and exit target prices into the forex market, they will supplement their findings with fundamental analysis. The upside to forex technical trading is that it’s much less time consuming and you are more likely to keep your emotions out of your trading. Technical analysis lets you trade on reality, you will trade on the truth of the market price and not what your feelings say the market price should be.
Algorithms For Trading is a blog run by a group of trading experts with a view to educate their audiences on anything and everything related to Forex trading. This blog is a comprehensive guide on Forex trading, and covers topics relating to a plethora of subjects that can benefit the reader in starting off as a trader, and to make their mark as a successful trader as they delve deeper in the world off trading. Also, if you happen to be an experienced forex trader but haven’t achieved much success in the world of trading, Algorithms For Trading can help you in this regard by proffering you with a horde of information on how to rise as a successful trader. There is a lot to be devoured at Algorithms For Trading; the more you learn the less will be when it comes to building your career as a forex trader with the prospect of triumph at every step.
Forex trading is also a global business with 1 trillion dollars being traded daily all over the world. However, transactions are only deemed legal when it is accredited by the Commodities Future Trade Commission. All other transactions are considered underground. Not exactly illegal but also not legal. These underground transactions are often done by individuals who want to play in the market.