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Point and figure trading in many ways is similar to the support and resistance breakout trading on bar or candlestick charts. The main difference is the look and functionality of the price charts themselves!

Point and figure charts represent price in a radically different manner from the more familiar bar and candlestick charts. Many forex charting platforms provide the option of point and figure charts.

Point and figure charts are a pure price action play because these charts generally exclude all other elements like time, volume and open/close other than price. Point and figure trading is based exclusively on price action.

Technical analysis is the study of price action. Technical analysis is used to predict or confirm an uptrend or downtrend or a consolidation in the market. Point and figure charts represent clear evidence of such important technical characteristics like trend, support/resistance and breakouts. Thus a point and figure chart focuses on the behavior of price action which is the most important factor from the technical analysis point of view.

A point and figure chart has got Xs and Os. A point and figure chart is constructed with a column of boxes alternately labeled with Xs and Os. An X column means that the price has risen in that column. Conversely, an O column means that the price has declined in that column.

A new column is created going in the opposite direction when a reversal occurs on any column. Only when price moves a significant amount regardless of time will an existing column grow or a new column is created. So there is no time, volume, opens and close on point and figure charts.

Two variables can alter the way the point and figure charts look and act. The first variable is the box size. This is the minimum amount that the price is supposed to move before a new box in the existing column is created.

You will see many columns of Xs and Os in the point and figure chart. X is equal to fixed price increase. Each X denotes a rising trend. For example, price would need to move an additional amount equal to the preset box size before another X would be added to the top of the column if a column of Xs has 10 boxes.

You only need to understand the concept behind the point and figure chart, you can use the charting software to do the actual drawing. Suppose, you are using the point and figure chart. You set the box size on the point and figure chart to be equal to 10 pips on the point and figure charting software.

Now the price would have to move another 10 pips above each X box before another X could be added on top of that X. On the other hand, price would have to move 10 pips lower than the each box in O column to add another O box on the bottom of the column.

How do you decide to add another column to the point and figure chart? The second important variable is the reversal amount. This is the amount of pips the price needs to reverse before a new column is created.

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There are a number of pivot points that you need to calculate. How is the pivot levels calculated? Beginning with the main Pivot Point that is calculated from the previous day’s key price points, the resulting support and resistance are subsequently derived from the following calculations:

Resistance 1 R1 = 2PP- Previous Low. Resistance 2 R2 = PP + (R1-S1). Resistance 2 R3 = Previous High + 2(PP-Previous Low).

Main Pivot Point PP = (Previous Low + Previous High + Previous Close)/3.

S3 (Support 3) = Yesterday’s Low-2(Yesterday’s High -PP). S2= PP- (R1-S1). S1 (Support 1) = 2PP – Yesterday’s High.

Now most of the trading software has the inbuilt function to calculate the pivot point for you. The main pivot point can be calculated for any time interval. The main pivot point is very important. After calculating these pivot points they are plotted on the currency price chart. Trader’s can calculate the current day’s pivot points using the above formulas based on the previous day’s price data.

Breakouts or bounces may be traded with pivot points and they are often also used as profit targets. Once these pivot levels are calculated and plotted, they are used in much the same way as Fibonacci Retracement. Pivot points also indicate whether the market sentiment is bullish or bearish. Traders also use pivot points as reference levels to provide information as to whether the current price is relatively low or relatively high within its expected price range for the day.

S1, S2 and S3 as well as R1, R2 and R3 are used as references in pivot point trading. For example, traders may look for long trading opportunities with the view that the price will reasonably move towards equilibrium around the main PP level if the price is near the day’s S2.

Many traders use different time frames in their trading decisions. You can also calculate the pivot levels for a week and for a month time frame too. Instead of calculating the pivot points for the current day you can also calculated the above levels for 4 hour charts as well as 8 hour charts.

When calculating the pivot points for the other time frames just replace the day’s highs, lows and the closing prices with the appropriate time frame highs, lows and closing prices. Both Fibonacci and Pivot Points are excellent technical tools that often encompass entire trading discipline in themselves.

The main pivot point indicates the mood of the market. Any price level above the main pivot point indicates a bullish sentiment in the market and any price level below the amin pivot point indicates the bearish sentiment in the market. The pivot point can become the target low for the trading session in an extremely bullish market condition. This number represents the true value of a prior session. It is important to understand that especially in strong bull or bear market conditions, it can be used as an actual trading number in determining the high or the low of a given time period.

Traders will step in and buy the pullback until that pivot point is broken by prices trading below that level. A retracement back to the pivot will attract buyers if the market gaps higher above the pivot point in an uptrending market. The opposite is true for the pivot point will act as the target high for the session in an extremely bearish market condition.

Generally prices come back up to test the pivot point if a news-driven event causes the market to gap lower after traders take time interpreting the information and the news. Sellers will take action and start pressing the market lower again if the market fails to break that level and trade higher. Technically speaking, in a bearish market, the highs should be lower and the lows should be lower than in the preceding time frame.

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Knowing the major market cycles is important for you and your trading system. Each market cycle requires a different approach from your trading system. There are four major market cycles. Adapting to market cycles can improve your profitability.

So you need to understand how to determine market cycles if you want to become a successful trader. Lets discuss these market cycles now. The four major market cycles are: 1) Trending, 2) Consolidating, 3) Breaking out of a consolidation and 4) Corrective.

Trending is when the market starts to move consistently in one direction either up or down. An uptrend means each higher high is higher than the previous high and each lower low is also higher from the previous low. Similarly for the down trend!

A Consolidation market also known as Non Trending market will look like a sideways horizontal line on a chart. Consolidating is when the market is struck between two horizontal support and resistance levels. You can use moving averages or other technical indicators to determine whether the market is consolidation or trending. In case of a consolidating market, the moving average line will almost be horizontal.

Now what is breaking out of a Consolidation? After the market has been consolidation for at least 20 bars Breaking out of a Consolidation is when there is a sharp increase or decrease in the price.

And the last market cycle is the corrective cycle. Corrective is a short sharp reverse in prices during a longer market trend. Many traders also use Elliott Wave Theory to determine waves which are also an indication of market cycles In addition to these four market cycles.

There are five Elliott waves and each one has its own relevance in determining the trading strategy. However, using Elliott Waves is somewhat advanced for most traders. You need to have a thorough understanding and ability to correctly determine which wave the market is in at that point.

Incorrectly identifying the market with either the four market cycles or by using the Elliot Waves can be a costly mistake. For example suppose the market is only in consolidation and you incorrectly determine that the market has entered a trend.

You might enter a trend trade and get immediately stopped out. Your best plan of action should be constant observation. Market experience is the best teacher and only overtime you will be able to correctly figure out the market cycle.

Right side of the chart is always an unknown quantity for the trader until it reveals itself. Hindsight is always perfect but trying to predict the markets can be an elusive and impossible endeavor.

Remember spring, summer, autumn and winter, the four seasons of a year. The markets have four cycles just as there are four seasons in a year. You need to learn what the different market cycles are in addition to having a trading system. That means you should develop the skill of correctly identifying the different market cycles at the right time.

If you want to become a successful trader than you should be adapt at identifying the market cycle. Effectively identifying the market cycles is a skill that all successful traders have mastered. You need to learn how to adopt your approach to those cycles to remain profitable. For example in a choppy, sideways bracketed market, you need to adopt your system and rules so that you do not get whip sawed and stopped out a lot.

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Candlesticks have become popular in the Western trading community especially the United States in the past decade. However, candlestick charting methods had been developed by Japanese rice traders hundreds of years back.

Internet made possible the availability of online trading to retail trading. The advent of internet has leveled the playing field for traders whether they trade stocks, futures, options, commodities, precious metals or currencies. In the last two decades there have been seismic changes in the way people used to trade. Access to the market is now only one mouse click away. Trade just by clicking your mouse!

The opening of retail trading especially in the currency markets that was previously only open to large players like big banks and corporations has been a revolution. Market information is now in most cases freely available online. Internet has made commission rates dramatically lower. The result is that a whole generation of new traders and investors want to try their luck beating the market. You can now demo trade with virtual money to develop and hone your trading skills.

Can you beat the market? It depends if you are using the right tools. I am a great fan of candlesticks charting and I have seen many traders both new and professionals becoming die hard fans of candlestick charting. Why? Because candlestick charting is the best tool available.

On your trading platform provided by most of the online brokers you will find various types of charts. There are many forms of charting techniques that have been developed over time. Why candlestick charting is superior to other forms of charting like the line charts, bar charts or point and figure charts? One of the best features of candlestick charting is its visual appeal and readability. You can glance at a candlestick chart and quickly gain an understanding of whats going on with the price action in the market.

Knowing support and resistance is very important for traders. Opening and closing price levels can be a very important area of support and resistance from day to day. You can easily spot and opening and closing price of a security or currency on a candlestick chart.

There are certain specific candlestick patterns that can help you identify when is the best time to buy, sell or wait on a trade or investment. This information can be extremely useful for short term traders like day traders and swing traders.

These candlestick patterns can be a real boon to your trading and you can combine them with other technical indicators for even more reliable results. Now in order to trade and invest effectively using candlestick charts you need to understand these candlestick patterns.

Many different types of candlestick patterns can tell you what may lie ahead in the market. Patterns appear on the candlestick charts as simple, single stick occurrences or complex multi stick formations.

Entry and exit are the two most important things in any trade. You may use the information provided by candlestick patterns to decide when to get into a trade, when to get out of a trade or even when to hang unto a trade you are already in. This information can be highly valuable in knowing that the prevailing trend might reverse or continue.

Now you can download your candlestick guide. You dont need to waste your money on buying a guide because this candlestick guide is a complementary gift for you from the Options University. This is the best candlestick guide in the market. Download your 82 page candlestick guide here complete with strategy flash cards all free.

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You need to develop or adopt a trading system. Without having a trading system, you wont be able to make a consistent level of profits in the market. Do you have a trading system that tells you when to enter the market? Lets assume that you already have got a trading system that tells you where to enter the market. Does this system also tell you where to get out before you enter the trade?

On the road to profitability, lets start by agreeing that we need stop loss exits. In other words are you taking the market conditions into account and willing to give your trade a breathing space so that you dont get whipsawed or repeatedly get stopped out.

Just dont forget, the more trades you place, more commissions or spreads you will have to pay and the higher your trading cost will be. After this agreement on having stop loss exits, we need to determine how to effectively select stop loss exits to avoid excessive stop outs.

When you talk of your trading system, you should think about its win ratio and the payoff ratio. You should want to improve on them. The best way to do this is to develop a stop loss strategy that takes into account currency market conditions. So right there you can increase your profitability if you increase the number of winning trades that is your win ratio thereby decreasing your trading cost.

Finding the right trading system can be a lengthy process. There need to be a connection between you and your trading system. It truly is like having a personal relationship. You must believe in your trading system and have a high degree of trust that it can produce consistent level of profits overtime.

If you have a trading system that isnt working for you and your win ratio and your payoff ratio dont generate a profit over time then you need to rethink your trading strategy. But you must also understand that no trading system can be perfect and no trading system can produce 100% winning trades.

When you lose a trade, it can be your trading system or it can be you yourself. Determine if it is your trading system that isnt working or is it your trading psychology that is off. Make adjustments to entry and exits. Maybe the market conditions have changed and you havent adjusted your trading system to the new market conditions.

Test your trading system overtime. Make a number of trades with your trading system. Just keep this in mind that if you dont give your trading system a chance to work jumping constantly from one trading system to another trading system in search of a holy grail wont help you.

Divorce is never a good idea. But if the things dont work out there is no recourse except taking a divorce. Divorce of any kind can be emotionally and financially expensive so proceed with caution when divorcing your trading system. The decision to divorce your trading system should be a carefully thought out one.

You ultimately will also be profitable if you feel comfortable and confident with your trading system. The primary purpose of your trading system is to make you feel comfortable and confident.

You will feel confident when your trading system has proven to you and you have proven to your trading system that both can work together. Its a team work.

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When selecting a trading system, first try to paper trade it. You need to paper trade your trading system to get the bugs out. Paper trading is not a substitute for live trading but still you can assume that 75% of the results that you achieve in demo trading can be replicated in live trading.

Use the results of these paper trades to calculate your win ratio and payoff ratio. These two figures are highly important to know for any trading system. Determine what your personal win ratio and payoff ratio are in using that trading system over time.

It takes three to tango here. The trading system, your money management system and you yourself, all three of you have to gel together. The stronger and more developed the relationship is between the three of you, the more profitable you will be over time.

So for you to become a successful trader, a trading system is not enough. You need a good money management plan as well. Win ratio and the payoff ratio are required in developing a sound money management plan that will work hand in hand with that trading system. What can be the best parameters to selecting your trading system? When selecting your trading system, use these five parameters:

1) Trade entries in the trading system are defined by market price activity, key support and resistance levels, volume and volatility dynamics and not on random and spontaneous decisions.

2) The initial stop loss exit is determined before entering your trade.

3) The trading system that you select is rule based. Just like the trade entries, the trading system determines the trade exits by market price activity, key support and resistance levels, volume and volatility dynamics and fundamental rules, not on any arbitrary dollar loss that you feel comfortable with.

4) A new trader should always paper trade in the beginning. But the importance of paper trading for experienced traders does not diminish in any way either. You must not underestimate the importance of paper trading though it is not a substitute for live trading. Your trading system has been adequately paper traded or live traded and you have determined your personal statistical performance. You need to know your win ratio and the payoff ratio.

Some traders would like to use the win ratio and the payoff ratio achieved by the other traders. Do not rely on the results that the other got with that trading system. Use the actual results that you attained while using that trading system in calculating your win ratio and the payoff ratio.

You can use a computer in testing the performance of a trading system. Again do not delude yourself by thinking that computer back testing can give you your win ratio or payoff ratio. Do not try to rely on computer back tested results. Your personal performance results are the real results that matter. You cannot depend on computer results and other traders results.

5) Your trading system should be mechanical and rule based. Your trading rules should be written out step by step in sequence so that the entries and exits are consistent, clear and above all quantifiable. This makes your trading mechanical and emotions free. This is very important.

One perfect example of a rule based trading system is the Turtle Trading System. Have you ever heard of the Turtle Trading System? You must read the story of the Turtle Trading Experiment. Turtle Trading System was developed for the commodities futures market.

The story of Turtle trading rules is very interesting. You must know the story of Turtle Trading Rules. The creators of that trading system had a discussion one day. One master was of the opinion that great traders can be made. The other master said great traders are only born.

So a number of completely new traders were selected to teach them those rules and see if they could become successful traders. Many succeeded with this trading system and became highly successful traders.

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Of all the financial markets, spot forex market maybe considered as the most pure in the sense that supply and demand is strictly what determines the prices. Spot means that both the buyer and the sellers agree on a certain price and make the transaction on the spot without any delay. The spot forex market is an over the counter market. The spot forex market is a decentralized network of buyers and sellers. There is no physical central exchange that acts as a central clearing house.

Over the counter means that the buyers and sellers make a binding contract with each other after agreeing on the price and this is not carried through an exchange unlike the forex futures trading that is carried out through the exchange like CBOT, CME etc.

Forex traders in the spot forex market carry out their activities by dialing directly with one another or through brokers on telephone or internet. There are several advantages of a central exchange like the counterparty risk for the trades is reduced. There is trading anonymity something that big players want to hide their trails.

In 2007, Chicago Mercantile Exchange (CME) along with Reuters launched FXMarketSpace; the worlds first centrally cleared global forex market place. In this centrally cleared system, CME will act as the clearing house and guarantee the performance of all the contracts for both buyers and sellers.

Only sophisticated investors with net worth of more than $20 Million can trade on the FXMarketSpace. Unfortunately FXMarketSpace is an institutional trading platform and is not open to retail forex traders.

The spot forex market is still skewed against the retail forex trader. Recently NFA (National Futures Association) had also passed certain new rules that make it more skewed against the small investor like you and me. Why is it so?

The spot forex market has always been an unfair playing field for the big boys. It became possible to introduce trading platforms for the retail investors with the advent of the internet. Previously spot forex trading was the playfield of the big banks, multinationals and the hedge funds.

Retail spot forex is seeing a lot of growth in the recent years. A mushroom growth of online forex brokers took place. Many did not have even enough capital with them to start the brokerage business. Most of these forex brokers behave like bucket shops. But this is the way; the spot forex market has developed over the years.

Why these players trade forex? What type of advantages they have over the retail forex traders? It is essential for you that you understand the nature of the spot forex market and who are the main players. Off balance sheet earnings are the declared aim of most banks and spot dealing in forex which represents a high loss potential but practically no credit risk falls in that category.

Over the counter nature (OTC) of the spot forex market means that currency transactions do not take place at any single place. Instead OTC means that the spot forex market is spread all over the globe.

In order to understand a banks motivation for get involved in spot forex trading, all you have to know is that by combining large forex dealing desk with a decent trading group, you are talking about billions of dollars in profits. A players access to the spot forex market depends on the quantity of transactions of large amounts of money. Players in the spot forex market range from those who trade billions of dollars daily to those who only trade just a few thousand dollars daily. Now these are the main players in the forex market against whom you as a retail forex trader will be competing.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

The lower the prices of oil, the lower the inflationary pressures are going to become but this is not always true. The higher the price of oil, the higher the inflation would be and the slower the economic growth is going to become. Take oil as an inflation input and a limiting factor on the overall economic growth.

We would like to factor changes in the prices of oil into our inflation and growth expectations and then draw conclusions about the course of US Dollar from them. Above all, oil is just one input among many.

Stocks: Almost everyone is familiar with stocks and the stock markets. You can take stocks as microeconomic securities rising and falling in response to individual corporate results and prospects. Stocks are units of ownership rights that get traded on the stock exchanges. You must have invested in stocks sometimes back. Many people invest in stocks. Buy and hold is the best strategy that has been followed over the years by the stock investor. Warren Buffet is the famous example who became the second riches man in the world by investing in good stocks over the years.

You can think of individual countries as companies and their currencies as stocks that get traded in the global financial markets. Currencies are essentially macroeconomic securities fluctuating in response to wider ranging economic and political developments. As such there is no intuitive reason that stock market should be related to the forex market.

There was a boom in the Tokyo Stock Exchange a decade back. Many investors wanted to take part in that boom. But in order to invest in Japanese stocks, they needed Japanese Yen (JPY). Heavy buying pressure on JPY made it appreciate. So sometimes a relationship develops between a stock market and a currency for the time being. However, long term correlation studies bear this out that there is no major relationship between stocks and currencies. Major USD currency pairs and the US equity markets over the last five years have almost zero correlation coefficients. However, the two markets occasionally intersect.

The US stock market may drop on an unexpected hike in the US interest rates while USD may rally on the surprise move. For example, when equity market volatility reaches extraordinary levels like when S&P 500 Index loses 2% in a single day, USD may experience more pressure than it otherwise would have. But there is no guarantee of that.

Bonds: When interest rates are on the rise, at some point, doing business becomes difficult, and when interest rates fall, eventually economic growth is energized. The bond market rules the world. Everything that anyone does in the financial markets anymore is built upon interest rate analysis. Globalization is here to stay. At the center of the globalization phenomenon is the entity known as the bond market. As a futures trader, you are likely to deal mostly, but not exclusively, with the U.S. Treasury bond futures. However, over the next 10 or 20 years, or perhaps sooner, the European bond market, and more than likely bond markets in Dubai and China, will play significant roles in the global economy.

Financial markets in interest rate futures, Eurodollars, and Treasuries (bills, notes, and bonds) important for all consumers, speculators, economists, bureaucrats, and politicians due to the relationship between rising and falling interest rates.

How can you anticipate the interest rate changes in the market? By following the bonds market! Ten-year T-note yields are the key for setting long-term mortgage rates. By watching this interest rate, you can pinpoint the best entry times for re-mortgaging, relocating, or buying rental property, and you can keep tabs on whether your broker is quoting you a good rate. Both the bond market as well as the forex market reacts to interest rate changes and inflation. Bond or fixed income markets have a more intuitive relationship with the forex markets as both are heavily influenced by the interest rate expectations. However, the short term supply and demand fluctuations interrupt most attempts to establish a viable link between the two markets on a short term basis.

Sometimes, the bond markets more accurately reflect the changes in interest rate expectations with the forex market doing the catch up. At other times, the forex markets react first and fastest to the shifts in the interest rate expectations.

Changes in the relative interest rates exert a major influence on forex markets. As a forex trader, you definitely need to keep an eye on the yields of the benchmark government bonds of the major currency countries to better monitor the expectations of the interest rate market. You can keep an eye on the US interest rates by following the yield curves of the treasury bonds. Similarly, you can watch the flow of money between the US and EU economies by watching the differential between the US Treasury Bonds and the German Bunds.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

The European Union consists of 15 member countries that include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom.

All these above countries share the common currency Euro except Denmark, Sweden and United Kingdom. These 12 common currency countries constitute the European Monetary Union (EMU). These 12 countries share a single monetary policy dictated by the European Central Bank (ECB).

EMU has a highly developed and efficient fixed income, equity and the futures market. The EMU is the worlds second largest economic powerhouse after the United States. This makes EMU the second most attractive investment market for domestic and international investors.

In the past, the EMU had difficulty in attracting foreign direct investment or large capital inflows. The primary reason was the United States. Historically US assets have had solid returns. As a result, United States absorbs something like 70% of the total foreign savings.

However, with the introduction of the Euro and the EMU beginning to incorporate even more members in Eastern Europe, the Euros importance is expected to increase. The capital flows to Europe is expected to increase.

With foreign central banks expected to diversify their Euro reserve holdings even further, demand for Euro is expected to continue rising. EMU is in fact a trade driven and a capital flow driven economy. Trade is very important to the national economies within EMU.

EU exports comprise almost 20% of the world trade. While EU accounts for only 17% of the world imports! Because of the size of the EMUs trade with the rest of the world, it has significant power in the international trade arena. Unlike United States, EMU does not have large trade deficit or surplus.

The formation of EU allows individual member countries to group as one entity and negotiates on an equal playing field with the United States. United States is the largest trading partner of EU. International clout is one of the primary reasons in the formation of EU.

Leading export markets for EU are the United States, Switzerland, Japan, Poland and China. Leading import sources for EU are United States, Japan, China, Switzerland and Russia.

EU is primarily a service oriented economy. Services account for more than 70% of the EU economy while manufacturing, mining and utilities account for around 20% of the EU economy. Large numbers of EU based companies concentrate their research, design, innovation and marketing part of the activity in EU while outsourcing most of their manufacturing to Asia.

It is important for most of the countries to hold large amounts of reserve currencies to reduce exchange rate risk and transaction costs. Most international trade transactions involve the British Pound, the Japanese Yen and the US Dollar.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

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There are four style of trading: Scalping, Day Trading, Swing Trading and Position Trading. Position trading is all about taking a directional market position and holding it as long as the trade makes sense from the trend standpoint. This means that positions are held for longer term.

Most individual and retail traders do not have the patience for position trading. Retail traders dont have the stamina to stay longer than a few weeks in a trade. Position trading may mean keeping a trade open from one week to a month to as long as a year or possibly more in the fast moving world of forex trading.

This is somewhat unfortunate as position trading can be one of the most profitable styles of trading due to the fact that many currencies tend to trend well on long term basis. Only those position traders who have the patience to stick with the trend and let their profits run are generally able to capitalize on these longer term price moves.

Due to its long term time frame, position trading tends to rely heavily on fundamental analysis along with longer term technical analysis. This is unlike day trading or swing trading that relies almost exclusively on technical analysis due to the short time frames.

Fundamental analysis concerns itself with the economic forces that drive the major market movements. Fundamental analysis is geared towards longer term price forecasts rather than the swing to swing movements that are primarily the focus of technical analysis.

The general direction of change in the currency value over the long run is what interests the position traders. The economic forces that determine the long term trend of a currency include interest rates, inflation, GDP, unemployment and help to determine the value of the national currency overtime.

Trading with the trend is what the trend traders do. Position trading and trend trading both follow almost similar approaches. However, position traders often rely on fundamentals along with the technicals; trend traders are almost exclusively technical in nature.

As carry traders hold interest positive positions to benefit from both regular interest payments and exchange rate profits, carry trading can be considered a form of position trading. How do position traders decide which position to take?

Fundamental analysis exclusively! Position traders establish positions on currency pairs according to their views and experience based on fundamental analysis. Forex position traders weigh strength and weaknesses in currencies by taking various fundamental and technical factors into account.

Lets suppose that a position trader is of the view that the US Dollar is indicating fundamental weakness going forward. He/she has performed fundamental analysis on economic conditions surrounding the major currency pairs that involve the US Dollar on either side of the pair.

The position trader thinks that the Euro is showing significant fundamental strength at the same time that the US Dollar is showing weakness going forward. This opinion may have been based on the recent rate of economic growth, comments by the Federal Reserve Board (FED) Chairman or the President of European Central Bank (ECB), the state of ongoing recession, on the state of inflationary/deflationary pressure in the economy and so on.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

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