How to Get Started in Online Forex Trading

Online forex trading is more than just day trading and fast moving prices. As large size market participants and investment banks look beyond the trading day.

Good Online Forex Trading Requires More Data

Online forex trading can be made much more successful. When traders take into account relationships between different countries and their economies. Even geopolitical events, and pure political decisions actually matter in FX trading. Apart from the usual fundamental data such as interest rates, economic growth, and inflation. The currency markets are also slowly but surely impacted by politics. Any decision that lessens the diplomatic power of a country. Will weaken its currency. Whereas decisions such as increasing military spending. Or spending billions in the next generation of nuclear weapons, will help make the currency stronger. Because political decisions such as these help make the reputation of a country much stronger. And foreign investors will only invest in currencies of serious, reputable countries. Attempting to forecast a currency based on economics alone, fails to deal with the reality of global trade. Global trade requires security and a sense of peace of mind. Which banana republic countries fail to provide… This makes forex trading even more interesting in the medium to long term. Because the market can easily defy bad economic news. This is certainly the case with the US dollar. At times of seemingly bad economic news. Where the right amount of diplomatic and political strength can easily sustain rally. Some forex traders test such long term trading ideas, through trading online demo accounts. The idea is to explore the possibilities of carry-trade strategies. Which are themselves long-term in nature. And to use both interest rate differentials, as well as geopolitics, in a largely funded account. In order to simulate such currency investing.

Online Forex Trading is a Serious Business

Online forex trading is seen by many traders of medium term market exposure, as a serious business. Something more than even just an investment. Just like large investment banks and large size carry-trade investors. There’s so much more to the market than just the typical economic data. And even though the economic cycle is somewhat repeating itself, making it predictable. Geopolitics and international diplomacy is unique, and exciting. A recent rift for example between the EU and Russia, brought about trade sanctions on both sides. As a result, some countries are banned from exporting to Russia, while other countries outside the EU have to export much more to Russia. The economic impact on the currencies involved is easy to figure out. But there are currencies, less obviously involved, which are also impacted by this rift.

Why the Medium and Longer Term Trends Matter So Much

All forex traders are impacted by week to week trends in the market. These trends are often hard to figure out, due to all the volatility. All technical and fundamental analysis tools provide ambiguous opinions and even more confusion. Is is only when traders think like investment banks, where they can look into the next 3 or 6 months. And think in terms of basic economic numbers, as well as geopolitics. The expectation is that the market will certainly defy some data. And that data will likely be some economic numbers. For example an economy may weaken, but the national currency will still go up. Or an economy may improve dramatically, and yet the national currency will depreciate, defying all economic analysts. Traders will still resort to trading live Forex rates in real time day trading. And in day to day trading. But the medium term market outlook will help them have a basic road-map. So as to assess market reversals and avoid major false moves.

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