The main thing to watch when trading the Forex markets is whether you are over or under estimated the amount of currency pairs that will be traded on a particular day. This is called Forex “guessing” and it can make or break your trading day.
You can be certain that everyone who is trying to sell you the latest trading software uses Quantitative Analysis. While this might be the fastest way to choose which currency pair to trade, it is probably not the best way to go.
That’s because the result of quantifiable trading is usually a guess as to which currency pair is likely to rise or fall in price within a given time frame. While quantitative analysis does seem to make sense, the numbers you get from this method may not correlate well with actual price movement.
If the amount of time frame that is used is too short, then you might end up with the wrong type of result. You can then run out of time to get a good read on the market and miss out on making a good investment decision.
A longer time frame and a larger number of trades will give you a better chance of getting a good read on the market and being able to set yourself up for a good investment decision. Of course, to do this you must have some Quantitative Analysis.
With time frames of two hours or more, it becomes much easier to get a good look at the market before you ever decide to actually purchase a trade. While using analytics tools to predict market movements and potential investments is great, if they are just guesses you could be trading with your bank account.
The trick to success is to look at more than one time frame to see the trends that are present in the market. Once you understand the actual market trends that are coming into the market, you are well on your way to setting yourself up for some very profitable investments. No matter what type of analytical tools you use, you must learn to use them to create a disciplined approach to your investments and Dynamic Money Management. Keep an eye on the amount of time you spend on your entry and exit points and make sure that the amount of money you spend in each phase of the trade stays under control.
The discipline and study that go into your investment should be coupled with a solid education in basic investment principles. If you are a new trader, you might want to take a crash course on how to make good investments in the currency markets.
There is a tremendous opportunity to make money in the currency markets without any formal education, so if you are a beginner, do not lose hope. I recommend that you start out learning about Quantitative Analysis and only add more complex investment concepts as you become more proficient.
It is important to have some understanding of what all of the various technical indicators mean in order to be able to follow a good trading plan and understand how they affect the market. Once you have been able to do this on a basic level, you will begin to realize the need for a deeper knowledge of the market.
It is also essential to have an in-depth understanding of trading styles so that you can avoid bad trades and capitalize on opportunities that can make long term gains. Finally, it is imperative to develop a portfolio of strategies that you can draw upon in case of a loss to help keep you from getting discouraged and in a rut.