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HOW DO YOU KNOW WHEN TO TRADE?

Okay, now you know the basics of forex trading, and how to trade. However, the trick to making money is not only knowing how to trade, but also knowing when to trade; when to jump and which direction. We've got two main tools to do that...

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Fundamental and Technical Analysis

Both are very useful, but neither gives the whole picture. At base, fundamental analysis involves looking at what's happening outside the market, while technical analysis looks at what's happening in the forex market.

Hopefully you didn't find that too confusing, but just in case you did, here's a bit more detail. Fundamental analysis is based on the presumption that a country's economic health and various actions by its government and central banks can have an effect on the currency's standing in the market. A stronger economy leads to a stronger currency, and an economic crisis leads to a weaker currency.

Technical analysis is slightly different, looking to the market itself rather than the forces that drive it. The idea is that you can look at what's happening in the market and use that information to make a reasonable prediction of what's likely to happen next. In many ways it can be a self-fulfilling prophecy, if lots of people are trading based on the trends they see in the charts, the exchange rates will continue to follow the trend.

Continue to Technical vs. Fundamental Now...

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