News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Real Time News
  • The Dollar’s first major counteroffensive since September takes the index more than 1.6% off the monthly low. Here are the levels that matter on the DXY technical chart. Get your market update from @MBForex here: https://t.co/hVshzMbc31 https://t.co/7oZkhDSray
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/nMRAwGEjfb
  • $USDJPY has built a short-term wedge inside of a longer-term triangle – but which one should a trader bias? Get your market update from @JStanleyFX here: https://t.co/7MNXSI2paR https://t.co/mw1AKm6RC7
  • Interested in what factors are influencing the GBP this quarter? Get your free forecast here: https://t.co/BF0gzdigjn #DailyFXGuides https://t.co/psgpGWiWDl
  • The Dow Jones, Nasdaq 100 and S&P 500 stock indexes may find fresh catalysts as the release of Q4 US corporate earnings set the tone for what has been a record-scrapping rally. Get your market update from @margaretyjy here: https://t.co/5B9NlmVI6Z https://t.co/0xdeBE3L7Z
  • Crude oil prices are poised to continue their upward trajectory in 2021, but technical signals hint that a near-term pullback may precede the next major push higher. Get your market update from @FxWestwater here: https://t.co/ePFyh64cAG https://t.co/Btbz1n5Dfg
  • $USDMXN continues consolidation as bearish momentum eases and bias attempt to turn to the upside. Get your market update from @HathornSabin here: https://t.co/J9vJ76Lghq https://t.co/pJGnuuyJNQ
  • The US Dollar breaks out of the range bound price action from the first of January going into the inauguration of President-elect Joe Biden. Get your market update from @DavidJSong here: https://t.co/GVxAmCkhP5 https://t.co/OC6g9pGhGy
  • Sterling continues to nudge higher against most major currencies with traders placing their trust in the ongoing UK vaccination plan. Get your market update from @nickcawley1 here: https://t.co/OvFP8Zzz5b https://t.co/rwofebQHTq
  • $EURUSD has dropped sharply over the last few days and may well fall further. However, it is also possible that the bad news is now priced in to the exchange rate and that further weakness will be delayed. Get your market update from @MartinSEssex here: https://t.co/mDGlI1aS6o https://t.co/1xYg0muBJI
A Cheat Sheet for People Afraid To Trade Forex

A Cheat Sheet for People Afraid To Trade Forex

2013-09-04 03:00:00
Tyler Yell, CMT, Currency Strategist

Article Summary: Trading the forex market may seem over your head but understand that you control when you trade, what you trade, and how much you trade. This means that you control your destiny more that you realize. Here’s a quick guide to show you how you can control your outcomes in the Forex arena.

“There are two mistakes one can make along the road to truth...not going all the way, and not starting.”

-Prince Gautama Siddharta

Historically, September is a month that turns a lot of investors’ attention to the Forex market. This is due to the fact that September is one of the worst performing months for the Dow Joes Industrial Average going back to its creation in 1896 with an average monthly drop of 1.07%. As stocks tend to perform poorly, investors and traders look to other markets and are naturally attracted to the Forex market as it measures as a $4 Trillion daily volume market that is readily tradable by the likes of you and me.

A Cheat Sheet for People Afraid To Trade Forex

However, many well-meaning and talented traders are scared away from the Forex market due to a few misperceptions that can easily be cleared up. Sadly, traders new to the Forex market shy away from many trading opportunities because they don’t understand how much control they have over their access to the market. Here are the key points about the control you have when accessing Forex.

Leverage – How large of a trade you’re controlling

A Cheat Sheet for People Afraid To Trade Forex

Presented by FXCM’s Marketscope Charts

Few things scare new traders like the leverage in the Forex market. If you’re familiar with our Traits of Successful traders report (sign up to access the report here), one of a few important findings that we share is that many traders do best with not leveraging their account more than 5x. However, it’s important to understand that when you open a trade, you decide the trade size and in effect, the leverage you will be using.

Learn Forex: Opening a Trade is Where You Determine Trade Size & Leverage

A Cheat Sheet for People Afraid To Trade Forex

When To Trade – Determining Which Market Environment You Participate In

Another misconception that a lot of traders have is that the currency market runs wild around the clock. However, what we found is that depending on what time of day you’re available to access the opportunities in the Forex market will likely determine the market environments you witness. In other words, if you’re trading from 6pm – 2am ET also known as the Asian trading session, then you’ll likely see a lot of ranges in which you can take entries near support or the bottom of a price channel to try and get into the trade until the top of the range.

Learn Forex: The Asian Trading Session Typically Displays Ranges with “English Speaking” FX Pairs

A Cheat Sheet for People Afraid To Trade Forex

Presented by FXCM’s Marketscope Charts

What You Trade Determines the Volatility You Will Likely Experience

If you’re unfamiliar with the ATR or Average True Range, it’s time to understand it. ATR tells you how much a currency has moved on average over the last 14 periods. Therefore, if you’re looking at a daily chart and you apply the ATR over the last 14 days, you will notice a wide range in the average distance a currency pair travels.

Learn Forex: Average True Range Varies Significantly Across the Board

A Cheat Sheet for People Afraid To Trade Forex

The way to read ATR is as simple as the table that I put together for you implies. This table tells you that by and far, you can expect the GBPJPY to travel more than the others based on its average movement over the last 14 days. Similarly, if you’re new to FX and you don’t have the stomach or confidence to handle large moves, then you can trade the EURGBP or USDCHF which move a fraction of the GBPJPY.

Learn Forex: GBPJPY is Often Too Volatile for Any Trader to Conservatively Trade

A Cheat Sheet for People Afraid To Trade Forex

Presented by FXCM’s Marketscope Charts

Putting It All Together

If you’re a new trader who is excited about trading the Forex market but you’re also nervous about what you’ve heard prior to reading this article, pleased understand this. You have more control over your results and exposure than you were likely first led to believe. You can control how much you trade, when you trade and what you trade to determine how exposed you are to the FX market.

Lastly, if you take the extreme example and trade GBPJPY which has the largest ATR at 144 pips per day on average over the last 14 days and trade it during the volatile London Session with too much leverage you are likely setting yourself up for more volatility and account equity swings then you can likely stomach. If you’d like a smoother introduction into live trading, it is better to trade with little to no leverage the low ATR currency pairs during the Asian trading session.

Happy Trading!

---Written by Tyler Yell, Trading Instructor

To contact Tyler, email instructor@dailyfx.com

To be added to Tyler’s e-mail distribution list, please click here.

New to the FX market? Learn to trade like a professional with DailyFX!

Signup for this free “Trade like a Professional” certificate course to help you get up to speed on Forex market basics. You can master the material all while earning your completion certificate.

Register HERE to start your Forex learning now!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES