Even if you have experience trading stocks and other assets, the forex currency market is vastly different in terms of the data you need to analyze. 

Before you trade currency pairs, you need to have a strong understanding of the tactics involved in forex trade analysis as well as the trading rules and best practices that will set you up for sustained success. Here are the six key principles that every trader should know before they start trading with real money.

When it comes to sheer popularity, some currency pairs clearly outrank others—with EUR/USD near the top of the pile. Due to how frequently it is traded, it offers an impressive amount of liquidity, as well as a tight spread that draws many traders in. Though it is one of the most popular, it may also be the most intimidating, which is why many aren’t sure how to actually trade it. We’re here to help. The following takes an in-depth look at the EUR/USD currency pair, explaining when and how to trade it effectively.

One of the most fundamental indicators of both financial market activity and exchange rate changes is the Gross Domestic Product (GDP) report. At its core, the GDP’s first release and its revisions influence the currency of the nation for which it is released. If the data comes out higher than expected, this is typically considered to be positive news, and the currency will often see a boost in relation to other currencies. On the other hand, when the GDP data is lower than the market expects, it’s typically considered negative news, and the currency will usually drop in value as a result.

GDP is such a commonly used term, with the GDP report being routinely cited. The following builds on the above introduction to further explain what how the GDP report impacts the forex market.

Overview

For adventurous and opportunistic traders, more aggressive forex trading strategies may offer appeal due to the increased earning potential that can come with those risks.

One such strategy is trading forex using leverage. If you’re unfamiliar with leveraged forex trading, it’s important to educate yourself on how leverage works and how traders might want to incorporate this trading option into their overall strategy.

Read on for eight important facts every trader should know before attempting leveraged forex trading.

To consistently turn a profit as a forex trader, your trading strategy can’t only rely on economic calendars and technical indicators to identify trading opportunities as they develop. 

Because forex trading is highly speculative, the sentiments of the overall forex market can be highly influential on the valuation of certain currencies—which means overall trader sentiments can actually move the prices of positions you’ve been targeting. 

Understanding the impact of currency pair sentiment on forex prices is a crucial component of any winning forex trading strategy. The better you’re able to understand these sentiments through the quantified tools and resources available to forex traders, the more effectively you will be able to make timely trades that leverage sentiment with other analyses to better predict price movements and profit opportunities.

Contract-for-difference (CFD) trading is a popular alternative to traditional investing because of its ability to maximize capital investments and, in turn, increase your potential profits or losses. This approach to forex trading has grown in popularity over the past decade, especially with some brokerage firms offering negative balance protection to limit heavy losses that would put your trading account into debt.

So what are the advantages of CFD trading? Here’s a look at some of the other key benefits.

Technical analysis is the study of actual movements in the price of a financial product.  However in my opinion, technical analysis is less about trading and more about the study of mass psychology.  We study the way people react in certain situations in the market, which is quite prevalent when identifying and trading using chart patterns.

Target trading is one of the most popular forex trading strategies. If you can identify how the market is trending and anticipate how prices will move, you can use that information to preemptively establish profit-taking points, or targets, at which to exit or partially exit your position. 

A grid trading strategy is a common form of target trading in which traders preemptively create conditional stop entry orders and set a profit target for each pending order.

Most forex traders want to stay active throughout the year, even as market conditions change. Whether you’re facing a bull market or a bear market, forex trading opportunities are out there for individuals who are willing to do the research and adapt their strategies.