Analyzing a the markets and keeping up with the fundamentals are core foundations of any trading strategy. My question is, what should one factored in when carrying out his/her analysis. A good day to y’all I’ll be waiting for responses. Thank you
#PipsChaser
1 Like
1)volatility: GBPUSD will be untradable if you dont have 5years experience of trading while AUDUSD or EURUSD will be more easy to deal with.
2)correlation: if you know that oil barrel production gonna be reduced so that price of oil will increase, why will you long USDCAD? you are sure to lose that trade since USDCAD have a 90% negative correlation with oil
3)news: personally i dont use news but you can. you should consider to close position or SL to break even before news because of increasing volatility
1 Like
you should look ath monthly and weekly charts to see if its trending up or down. You should then look at the timeframe you want to trade, are you a scalper looking at the 5m are you intraday looking at the 1h are you a swing trader looking at the daily. There are many different ways so firstly you need to decide what trader you would like to be. Then you can use indicators, price action, moving averages to name a few
3 Likes
I’m not really a fan of so many indicators lol…
A good way in my opinion to going about analyzing the pairs you want to trade for the week ahead is simply breaking it down. Naked forex.
Try and determine the highs and lows of that particular FX pair. Is the market going down, up or ranging.? You should then identify key structural levels in the market. Then look out for which of those levels price has respected and which has price been breaking out off as well as which of them price has been retesting. And at the very beginning of all that, make sure your charts present to you a trending market. No one wants to be stuck in a ranging uncertain period in the market not knowing which way its going to turn and getting emotions all jumbled up in there with it. You should then await confirmation out of those structural levels before placing a trade. Such as break and retest or if you want to go down the candlestick patterns route.
A good tool to use with this in my opinion would be the fibonacci retracement tool in order to get another bias.
A lot of times indicators could be misleading. They can very well be used to determine the overall sentiment of the market , but remember most of them a lagging indicators. Indicators in my opinion should add to your bias in trading and not used as a means of telling you when to go long or short.
6 Likes
Don’t concentrate just on the pair you are looking at. Remember it is an exchange rate between two currencies, its not the price of an asset like a share or a commodity.
There are 28 leading pairs and each of the 8 major currencies is seen in 7 of those pairs. So remember to consider what is happening in the other 6 pairs of each currency seen in the pair you’re currently analysing.
If these seems complicated don’t give up, because many of these pairs behave in a predictable way in relation to each other - correlation.
3 Likes
Yea, I agree, by restricting yourself to one pair, you will end up making more poor quality trades if you trade frequently. However, it’s a different story if you trade only when the setup looks perfect.
1 Like