How to Find a Successful Forex Trading System

How to Find a Successful Forex Trading System The Foreign Currency Exchange
Market, or more commonly known as the Forex market is the largest financial
market in the world. Over $2 Trillion dollars are traded on the Forex market
every day. Forex traders make money in the currency exchange market by
playing one currency against another. They play currency pairs and bet that
one currency will either increase or decrease in value and the other
currency (or cross currency) will go in the opposite direction.

As I mentioned, Forex traders trade currency pairs. For example a trader
might play the Euro against the US Dollar (EUR/USD pair). If the trader
thinks the EUR will increase in value over a certain period of time, the
trader will go "long" the EUR/USD pair. If the trader goes long this
currency pair, he/she is betting the EUR will "increase" in value against
the USD. If the trader is right, they make money. If they're wrong, then
they lose money. Successful traders always employ a good forex trading
strategy so they consistently profit from their trades.

There are two ways to play the Foreign Currency Exchange Market that all
experienced Forex traders use. One is called Fundamentals and the other is
called Technicals.
Fundamentals refer to news events that move the markets.
For example if a country increases interest rates, then most likely that
will cause the currency to increase in value. If a country releases poor
housing numbers then that could cause the currency of that country to
decrease in value.

The technical side of trading the Forex markets refers to using charts and
indicators. Price charts and other technical tools are used to determine a
possible trade.
Indicators like MACD, Stochastics, moving averages and more are just a few
of the tools in the technical traders toolbox. The best Forex traders use a
combination of both fundamental and technical trading. Great traders never
rely on just one side.

Some traders trade longer term and some trade short term. A long term trader
is considered a position trader. Position traders take a longer term
approach to trading the forex market. For example if one currency looks like
it could be bullish over the next few weeks or months, they may place a long
position trade and let it ride for weeks or months until they exit their
trades to take profits.

Traders who take a short term approach to trading are considered day traders
or intraday traders. These traders only have open trades for a short period
of time and most of these Forex traders open and close their trades in the
same day or within hours. Most technical traders don't like to have open
position around news time because some major news events can actually cause
a great technical trade to fail because of an unexpected news surprise.

No matter what style of trading you use, as long as you use a great forex
trading strategy and stick with the rules of those strategies, trading the
forex market can be a very profitable way to make a living. Not only is a
good forex trading strategy important but good money management plays a big
role as well. As long as you manage your winners and losers and set the
appropriate stop losses and profit targets, you will quickly find that
trading the Forex market can be a very profitable business.

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Andrew Daigle is the owner, creator and author of many successful websites
including ForexBoost at http://www.ForexBoost.com , a Free Forex Training
Resource for the Novice and Advanced Forex trader.