By James Smith
Once you have an idea of how much you want to invest in each of your trades you need to begin with an appraisal of the market. Taking advantage of the scalping opportunities in the online Forex exchange is not an easy thing to do, so be prepared for a good deal of a learning curve. There is nothing wrong in acknowledging something is difficult, but if you do not take it upon yourself to move forward in a way that is responsible your life as a trader will be short lived. So the single best thing you can do for yourself is remain as educated as possible with regard to what the market is currently doing. The most important chart for gaining an idea of what this is the daily chart, lower time frames are great places to look for an entry point, but the daily chart determines market sentiment (to a good extent).
There are of course other factors, but if the market is in the midst of an overwhelmingly bullish move on a given pair the last thing you want to do is be in a short sale. This is where careful analysis is most definitely a good idea, and where the importance of identifying a trend really comes into play. Aside from a trend it is a very good idea to know where gold is at price-wise if you are trading the US dollar, this is because the US dollar enjoys a mostly inverse relationship with precious metal where value is concerned. Such a fact is not lost on traders who practice the typically accepted golden rules of fundamental analysis, and while there is no hard fast rule in Forex (aside from risk management) you need to have a well-rounded sample pool of indicators.
Being able to take advantage of the top down method requires that you are able to move forward without moving blindly. Due diligence must be applied whenever and wherever possible, if it is not then you are certain to be in some serious trouble. Another way to look at this is from a macro to microeconomics purview, in which you extrapolate what is occurring only to then zoom in. One of the most sensible rules that has ever come across my own sense of logic is to “never trade against the trend”, this is a great rule…but it will rob you of many opportunities, so you must weigh each trade carefully.
About the Author
The author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to stay up to date with the latest forex quotes<a/>.
