When I decided to trade for the first time, I was feeling like I was on top of the world. I was thinking that within next few weeks, I will be a millionaire. But that was what I was feeling. But later, after loosing a few thousand dollars. It occurred to me that the foreign exchage market does not work the way I feel. I realized that I was unaware of even the basic knowledge of the foreign exchange market.
So if you do not want to lose money in forex. You must get the right knowledge first. Luckily you can have the right knowledge by reading and understanding free forex ebooks. There are few aspects of forex tranding that you must read in free forex ebooks. This article is all about the four free forex ebooks that you must read. So here are the topics in forex market that you should master to be successful.
1- Trading psychology: It is said that the psyciatrists and psychologists are more good at trading then the economists. surprizing is’nt it? But that’s the fact. The reason behind this fact is that the economist mostly base their trading on economic facts and figures. While on the other hand the psyciatrists and psychologists trade on the basis of their knowledge of people’s emotions. Cunfused? let me make it clear. We all know that the foreign exchange market works on a supply and demand basis. What happens when an important economic news comes in? The market reacts suddenly. More precisely, people react to the news based on their emotions and psychology.
So the bottom line is, you must master the trading psychology and your emotions. A free forex ebook regarding trading psychology can help you alot with that.
2- Fundamental Analysis: Stick to the fundamentals. It is an old school saying in the trader’s community. And it is 100% right. It is the fundamentls that derive a currencies’ worth. The most important fundamentals include interest rates, unemployment level, central bank’s policies, gdp, trade balance etc. Read a free forex ebook about fundamental analysis and get the insights of fundamental analysis.
3- Technical Analysis: One of the favorite and most widely used method of trading to predict the price action. It is actually a tool to analyze the market’s price movement, volumes and open interests, obtained from the past price action to predict the market price. Mostly it is the study of charts of past behavior of currencies’ price to predict the future price movement. Technical analysis is very useful beacause the price is the reflection of all market forces that are in the market.It is also useful because the price movements are historically repititive and trend followers. Grab yourself a free forex ebook that deals with technical analysis. Understand it well but be aware that generating signals with technical analysis alone is risky. tally it with the fundamentals too.
4- Commitment of traders(COT). We all know that there are many players in the foreign exchange market. There are individuals like me and you, Banks, brokrage firms , hedge funds , central banks, government agencie etc. But the key players in market are the ones with huge capital. May be billions to trade. These key players are often called the big dogs. The reason why are they the key players is the fact that they have huge money to trade. So when they place huge orders, they are likely to effect the market more then us, the individuals.
So if we had a hint of what they are doing, we can profit from it. Luckily we can have a hint of what the big dogs are doing. It is a report called commitment of traders(COT), that is compiled every tuesday and released every friday by the Commodity Futures Trading Commision (CFTC). It gives very useful data. Indicators derived from this report can provide traders with a unique market perspective that is not available by traditional prive driven methods.
So get yourself aquainted with these four key aspects of foreign exchange trading. Get yourself some free forex ebooks that deal with these aspects. Once you master them, you are locked and loaded to trade the foreign exchange market.
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