World Events and Wise Forex Trading.
By: Andres Ferri
Forex trading has the great potential of becoming a profitable
and fulfilling career that will let you have a lifestyle that few
other lucrative activities in the world can offer to people from
many roads in life and without asking any of those men and women
for a diploma or some special certification.
But Forex trading is not easy; it may be simple to enter and place
your first trade but becoming a profitable trader is a different
thing. You will need to acquire the right knowledge and techniques
in order to understand and know when to enter or leave a trade
always fulfilling the main objective every trader must have; making
money.
There are two kinds of analysis you can perform on the Forex
markets. They are known as technical analysis and fundamental
analysis. It is common that traders tend to divide themselves into
technical and fundamentalists. Each group devoting themselves to
the main tools each kind of analysis gives them.
Technical forex traders base their trading on the analysis of the
charts and the number of indicators derived from the plots of price
oscillations and patterns. Meanwhile Fundamentalists traders base
their trading mostly on the fundamental numbers and economical
indicators of countries economies. Though, even if divided, both
tendencies tend to complement each other to some degree.
In this article I will place myself on the fundamentalists side and
focus on one of the situations every forex trader must be aware of
and don't let the events involved affect his trading efforts.
This risky situation is that when unprecedented chaotic world
events start to develop as the trading day goes on. The power of
the media (tv, internet, printed) can magnify and sometimes it may
even distort the events taking place and impacting the trading
journey in a significant manner. The result of this magnification
and rapid diffusion of the news about the series of unfavorable
events taking place is an increased atmosphere of fear, confusion
and uncertainty in the trading world. And fearful traders are not
prone to make the best trading choices because they have given
themselves to panic and emotional reactions instead of reasoned and
intelligent decisions.
If you need to have more specific examples of these kind of events
you can search a bit inside your memories and consider the impact
of just a few types of unfavorable chaotic world events as the
political upheavals or corporate scandals of companies as; Enron,
WorldCom, or of people as the case of Martha Stewart trial, etc.
There is also the example of the terrorist attacks on Sep 11 in New
York, March 11 in Spain, etc. Also natural disasters: tsunamis,
earthquakes, floods, freezes, droughts, hurricanes along with wars
can cause great disruption in a trading journey.
In short, every forex trader should be totally sure that his method
of trading has built-in safe guards (stops, limit orders) to
prevent a major financial loss from his trading account in case any
of the unfavorable events I mentioned above ever takes place. And
being realistic, many of those events will surely happen in the
future.
Adrian Pablo is a Forex freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of forex trading , visit: www.1-forex.com
Article Source: http://www.articledashboard.com