This article looks at the types of informed FX rates trading that you can do.
When you trade on the forex market you should try and be an informed trader. There are two types of informed traders and they are the technical and fundamental traders. It is important that you understand what being an informed trader is and how you can choose the way that you should be trading.
What is an Informed FX Rates Trader?
The first point that you have to consider is what an informed FX rates trader is. The informed trader is the trader that everyone should look at being. When you are informed you will know the information that you need to in order to trade correctly. If you do not then you are not going to be an informed trader and this can lead to a number of other problems.
The Informed Fundamental Trader
The first type of informed trader that you can look at being is the fundamental informed trader. These traders believe that the movements on the FX rates market can be determined through the news events that affect the market. These forex news items will range from the monetary policies of a country to the employment rates.
To properly trade with fundamentals the traders will need to understand the impact that the news has on the market and what other news events affect the reception of the news. Many traders feel that this is easier to complete than technical analysis. If you are one of these people then fundamental informed trading is the right option for you.
Of course, you will have to consider the downside of this trading before you commit. The downside to fundamental trading is that nothing is etched in stone. This means that the analysis that you complete could be wrong.
The Informed Technical Trader
The other type of informed trading that you can do is the informed technical trading. This is the method that a lot of traders look at because they assume that it is easier than understanding the nuances of fundamental trading. The truth is that technical trading can be just as hard as fundamental trading. When you trade with technical information you are going to be looking at the forex charts and determining what could happen based on the movement that you see.
Technical traders are able to use indicators on the charts and the price patterns to determine how to trade. The method that you use should be the one that you are most comfortable with and that you understand the most. If you do not understand the analysis that you are completing then you will not be able to determine what you should do on the market.
The downside to technical informed trading is that it can go horribly wrong. If you do not use the correct tools when you analyse the market you could move in the wrong direction or trade at the wrong time.
Combining the Trading
When you look at which trading you should consider you may assume that each method can be used alone. The truth is that technical traders and fundamental traders will benefit from the insight that the other can get.
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