A popular way of identifying trends is using moving averages. A moving average is a line on a chart that smoothes out price action by calculating an average of closing prices over a period of time and displaying the result on a chart providing an overall direction for a set period.

There are two variables to be determined when using a moving average. You need to decide first on the time period you are going to use to obtain the average and, second, what method of averaging you are going to use.

Volatility is a two-sided coin when it comes to forex trading. On the one hand, volatility is how forex traders are able to turn a profit, especially when looking to make a quick buck off short-term trades.

Index trading is a popular, easy way to invest in a group of businesses, or a representative sample of a country’s largest companies, without being forced to invest in individual companies.

For forex traders, index trading is an attractive alternative to directly investing in a specific country’s stock market. Typically, indices are designed to offer a reflection of a given country’s economic strength. But these indices can also serve as a high-performing collection of select holdings from a single market, offering a more concentrated investment opportunity in a foreign country’s economy.

Contract-for-difference (CFD) trading is popular for index investments. Of the various indices available around the world, the US30 is one of the best-known options available to traders, offering an easy way to get exposure to 30 of the United States’ largest companies.

It is widely accepted that when you start trading, you never consider the most critical issues to becoming a consistently profitable trader.  Often, all you can think of is how much money you are going to make and how you cannot wait to start.

When it comes to managing risk, an often-overlooked component is probability, or the likelihood of something happening.  Even then, I strongly believe that many traders misinterpret the rules of probability. Some believe that if they have an unprofitable trade, somehow this increases the chance that their next trade will be profitable. If they incur a string of losses, they believe that their chance of a profitable trade increases as each unprofitable trade passes.

The most dominant issues in November were the United States Federal Reserve (Fed) and their plan on interest rates, as well as the latest update in the Brexit and election saga.  In the U.S., the spotlights are always on the Fed and at a recent conference in Washington, New York Federal Reserve President John Williams said that the Fed has interest rates at the appropriate level for the U.S. economy.  "I think we have monetary policy in the right place. The economy is right where we would like it to be." Markets only see around a 25% probability of a rates move at the Fed’s next meeting on 10th – 11th December.  The Brexit critics continue to roll up to have their say.  Recently retired former speaker John Bercow says leaving the EU is the United Kingdom's 'biggest blunder since World War II'.  At a dinner in London, Mr Bercow was quoted as saying, “I don’t think it helps the UK. Brexit is the biggest mistake of this country after the war. I respect prime minister Johnson, but Brexit doesn’t help us. It’s better to be part of the [EU] power bloc.”

Unfortunately, many people who start trading find success difficult to achieve, especially early on.  Trading is a challenging endeavour that has torn people from across the world across generations, from every extreme of their emotions.  

It is our money that is directly involved in trading and therefore at risk, and the potential of making more money is our primary motivation for beginning this undertaking.  Ironically, it is the money that encourages the vast majority to attempt to trade yet it is the money that causes most people to fail.

Within the forex market, there are traders known as position traders (sometimes listed as “buy and hold” traders), who take positions for the long term. They base this on long-term charts and macroeconomics, and they operate in pretty much every market there is—including the hyperactive forex market. 

Considering how the popularity of position trading is growing, it’s worth putting this market approach under the microscope. Here’s a look at the details behind position trading, along with how common traders use positions.

If you’re serious about forex trading, you need to understand how charts and chart analysis tools can help you identify trades that maximize your potential earnings while minimizing risk. 

Standard chart patterns are easy to identify just by glancing at a chart and spotting certain movements, but advanced patterns, also known as harmonic patterns, require additional tools and information to identify trade opportunities and monitor price movements.

These harmonic patterns offer incredible value to traders who use them to inform their trading plan, and all of the tools you need to spot and track these patterns are available in online platforms such as MetaTrader 5. In general, the key characteristic of any harmonic pattern is the way the chart movement corresponds to the famous Fibonacci levels.

One of the biggest challenges of forex trading for beginners is knowing when to close your position. When your open position keeps rising in value, it’s tempting to believe the earnings will never stop. And when prices take a turn for the worse, pride and ego are often begging you to hold on and wait for things to turn around.

But timing is everything. When you hold an open position for too long, it almost always ends up eating away at your profits. In general, how long you should hold an open position is dictated, at least in part, by the type of trade you’re trying to win. Different traders use different strategies to turn a profit on forex price movements, and it’s always important to stick to your guns when allowing a strategy to play out.

With that in mind, here are some guidelines on how long you should hold an open position, depending on the type of strategy you’re using.

It is fair to say that the foreign exchange market is very news driven.  For example, a central bank governor says something unexpected and there can be a significant impact on currency prices in a short period of time.  Even something as simple as a different word used from the previous month, to describe market conditions can send a ripple through the markets.  

When central banks change monetary policy and change the official cash rate, that countries’ currency may also move very quickly.  

There are also numerous regular reports which provide an insight into how well an economy is performing or not.   These can lead to assumptions on what central banks decide to do in order to stimulate an economy or keep in inflation in check, which then has a direct impact on currency prices.