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In this sense, it is very much a moment-to-moment assessment of market movement that matters. Even so, the most successful forex traders are able to employ broader analysis as well. Here are a few tips on how to assess forex movement in a more over-arching manner.
Follow the Experts
In our post on ‘Helpful Tips for Entering Into Forex’, we’ve written previously, the tip to follow the experts was given as a “cheat code” for any investing venture. This is a good way to think about it, really — not because experts are always right, but because if you listen to them regularly, you’ll get a strong sense of what strategies are working. This is also important with specific regard to taking a broader look at the forex market, however. Observing the market itself on any given day will, again, show you only small, incremental movements. An expert takes on forex will often give you a better idea of what larger patterns are becoming clear, and where the people in the know see different currency values heading.Track News From Major Economies
A handful of major economies drive much of the activity within the forex market. The U.S. dollar in particular is involved in all “major” currency pairs and can have broader ripple effects in the forex world. Accordingly, it’s wise for a strategic trader to keep an eye out for any significant economic news relating to major economies.Find our comprehensive listings of businesses in Nigeria here https://businesses.connectnigeria.com/
As an example, a Reuters report stated that the dollar was making gains as a result of “upbeat manufacturing data” in America, among other things. A forex trader closely monitoring the U.S. economy might have seen that manufacturing data, anticipated an uptick in the dollar, and capitalized on it.
Watch Heat Maps
A heat map is almost by definition a way to look at the forex market in more of a “big picture” manner (as opposed to monitoring the tiny fluctuations in different currencies over the course of a day). The heat maps on FXCM show exactly how the concept works, for those who aren’t familiar — depicting currency gains and losses as a sort of bar graph that puts them in perspective against one another. Rather than seeing how much a single currency rose or fell in value of late, you can look at heat maps like these and see how that currency’s performance compares to others across the market. Further analysis is required to make sense of this information, but it’s still one of the best ways to observe the full scope of forex.Learn Correlations
It’s a simple idea, but as it was stated in a piece on The Balance, when you trade in forex you have to “consider the economics of two countries.” In other words, you don’t just have to be aware that the dollar may be rising because of positive economic news. You also have to know how the Naira is poised to react to that rise. Some of this comes down to the latest news and economic trends. However, a good forex trader will also study and learn correlations between currencies. Different currency relationships can often act similarly over time, such that while correlations are by no means absolute, they’re worth factoring in. There is no perfect or definite way to master forex. Just as you need to learn to read market movement and develop trading strategies though, it’s a good idea to find ways of keeping an eye on the market more broadly. The more comprehensive your forex knowledge is, the more likely you’ll be to succeed. About The Author Johnny Collins worked for investment companies before deciding to leave the corporate space and become a freelancer. He now takes on financial/investment analysis projects, as well as writing opportunities that cover economy, business and tech. Featured Image Source: UnsplashGot a suggestion? Contact us: editor@connectnigeria.com