Forex Prices - 4 Essential Facts You Need to Know About Price Movement to Win

If you want to win at Forex, you need to know how and why Forex prices move and here we will give you 4 essential facts to help you make bigger Forex profits. Most traders don't understand these facts and lose so make sure make them part of your essential Forex education.

Forex prices are made by countless millions of opinions which all come together, to make a price and being humans, we don't think logically we are influenced by our emotions and this leads into our first fact on Forex price movement.

Fact 1. Price Movement is Un Predictable

Those people who think you can predict currency prices in advance are wrong; if you try and predict highs and lows in advance your hoping or guessing and that won't get you far in Forex. Its obvious prices can't be predicted in advance because if they could there would be no market, as we would all know the price in advance.

The fact you can't predict in advance doesn't mean you can't win - you can but you must trade confirmation of a change in price and we will explain how to do this later but now, let's look at one of the most popular ways to trade Forex which causes losses.

Fact 2. Predictive Computer Programs Don't Work

You see lots of cheap Forex software which claim they use mathematics to predict price movement but if markets are not predictable, using mathematics is of little or no use.

Most of these systems are back tested ( check out the disclaimer and you will see the word simulation on the track record) and the system is simply bent to fit the data. When trading forward though they lose, as Forex prices never repeat exactly the same way again.

Using a cheap Forex robot is a guaranteed way to lose money.

Fact 3. Volatility in the short Term is Random

All short term price moves are random and support and resistance levels are not valid in periods of minutes or hours. If you try and scalp or day trade, the odds are against you and you will lose. Always look longer term, where you can get the odds on your side and forget short term trading.

Fact 4. Forex Trading is a market of Odds NOT Certainties

You will have losers in an odds market but that's fine, if you focus on high odds set ups and cut your losers quickly and run your profits, you can make a lot of money.

Some of the most successful traders are ex poker players and you need similar skills to win at Forex. In poker, the successful poker player focuses on high odds hands and bets on them and passes by low odds hands or folds - you should do exactly the same in Forex.

If you trade long term and you have the discipline to keep your losses under control and run your profits, you can make a lot of money.

Play the Odds and Win

Perfection and prediction are a myth, there is nothing wrong with taking losses short term, if you make huge long term gains so forget perfection and being right all the time and focus on making huge long term gains by simply trading the odds.

How to Make Money Online with FOREX

1. FOREX = FOREIGN EXCHANGE. Forex trading is exchanging one type of currency for another. For instance, trading American dollars for the equivalent value of Euro. In this scenario, you are selling American dollars and buying Euros. It is a form of trading that does not involve the transfer of property or assets other than money/currency.

1. Step 2

   MAKING MONEY WITH FOREX. Trading currency for profit is a guessing game, often referred to as 'speculation'. You 'speculate' that a particular currency will go up or down in value. Like trading stock, when you believe a currency is about to go up in value, you move to purchase it at its current low rate. You do this by selling a currency you believe will be of less value than the currency you are purchasing. EXAMPLE: You have $50 US dollars that you believe will be less valuable in the near future. At the same time, you see that the Euro is about to go UP in value. As a Forex trader, your speculations would suggest you should exchange the $50 US for the equivalent value of Euro. If, as you predicted, the Euro increases in value while the
   US Dollar does not, you will earn money as your Euros rise. However, if your speculations are wrong, and the US Dollar thrives while the Euro takes an unexpected dive, you will lose money.

2. Step 3

   LEARN ABOUT FOREX. Before you invest in Forex trading, you should have a good idea of the rules. Gain Capital Group's website, Forex.com provides basic tutorials and advanced instruction for traders of all experience levels. Learn about trends and warning signs in the market. Make use of their free resources to make an informed decision about working from home as a Forex trader.

3. Step 4

   PRACTICE FOREX. Rarely are we given the chance to try our hand at making money before we invest. Forex trading is unique in that you have the ability to try it without investing a cent, for as long as a month. To making money online with Forex, visit the link listed in the resources. This will direct you to a 30 day practice session with Forex trading. In this practice session, you will not be using real money, so there is no chance of financial loss if you are not particularly good at Forex trading. Likewise, if you discover your practice investments make money, don't forget that it's not real money. You will not make or lose money with the 30 day free practice session. However, you might discover you have a wildly profitable talent to make money online as a trader.

4. Step 5

   JOIN A FOREX TRADING GROUP. If you are pleased with your results from the 30 day free practice session, and you feel confident about your ability to make money online with real Forex trading, you will have to join a trading group. This is a simple process that generally requires a small fee. Simply perform a Google search for such groups.

Does news really matter these days?

This is a question that has started to rumble among new and experienced traders in the circles in which I tend to hang around. The market these days seems to care less about the news because even though much of the news has changed from negative news in which we became numb as it was expected to be such, it seems as if the markets have reacted far less in a shorter amount of time with recent good news than with the bad.
Even Non-farm Payroll numbers for December seemed to move the market very little. It was not until shortly before the New York markets closed that it made any type of large movement. I think people are preparing for a Dollar reversal. How much further will it go before people, including banks, will jump back on the wagon? The Dow staying high despite the economic condition can be a direct result of the declining Dollar. There has been no reasonable retrace of the market since the current rise began during the Q2 earnings reporting season in early July.
My suspicion is that banks are going to start to buy the Dollar despite the danger facing the currency due to the current U.S. administration's borrowing practices including the planned liabilities through future spending programs and lack of tax revenue from increased tax rates levied upon businesses when tax cuts expire at the end of the year. This buying may cause followers and others to ride the wave and we could see the Dollar trend up for a several months before ranging before the U.S. mid-term elections in November 2010.

George Rozansky is a Forex and stock trader and owner of managedforextrades.com and co-founder of ircforex.com.