July 5, 2017, 8:10:30 AM EST
by Newsmovesmarketsforex Staff Writer
Trading in the Foreign Currency Exchange (Forex) is a craft. Like all crafts, mastering it will require dedication, practice and hard work.
Before you start making money, you will have to learn a few tricks of the trade. Here are 7 things that successful traders do:
They Have a Defined Set of Goals
Successful Forex traders are great planners. Before each of their ventures, they have in mind what it is they are trying to achieve. With a clear mindset and pre-defined goals, they get into the field quite prepared.
They Carry Out Rigorous Risk Assessment
Risk assessment is very important for trading confidently in the Forex landscape. Successful traders perform thorough risk analysis before they join in the action. They know exactly what they will be losing if things do not go as planned. This allows them to stay in control of the situation.
Forex traders should be extremely aware that investing or trading in the foreign exchange markets encompasses a great deal of risk and may not be suitable for everyone. Prior to investing money in the Forex market you should access or consider your investment objectives, level of experience and risk appetite. One should only use risk capital, traders should never invest money that you cannot afford to lose.
They Know Their Entry and Exit Timeframes Accurately
Successful traders are seasoned professionals. This means they know how to accurately read charts. For instance, they might be using a weekly chart for trading directions and a daily chart to time their entry. However, they know how to accurately synchronize the two for better decision-making.
They Have Learnt to Like Small Losses
Successful traders have adapted to the idea of small losses in Forex. They do not use the money that they have allocated for trading. Also, the maximum risk they take on total funds is 2%.
They Think in Ratios, Probabilities and Percentages
Successful traders are good with numbers. They are wary of changes in the market and know exactly what change will lead to what effect.
Thinking in terms of ratios, probabilities and percentages allows them to have an edge.
They Never Make Emotional Decisions
It is not gut feeling or emotions that drive their decisions—it is data. Chance events, such as winning, consistently on a particular platform, do not let them lose sight of the situation. Objectivity is one of the crucial keys to their success.
They Carry Out Analysis Every Weekend
On weekends, the Forex markets come to a halt. This gives successful traders some time to look for patterns and market trends. With insights into the field, they become better players. New Moves Markets Forex provides the latest and most relevant Forex market news. The platform serves as a go-to resource of forex rates and charts, technical analysis, real-time Forex calendar and more for Forex traders around the world.
Financial markets across the world are known to react sharply to worldwide economic events. These events have a major impact on currency markets and that’s why it is extremely important that Forex traders monitor the release of news on major global economic indicators.
One such news event is the monthly release put out by the Bureau of Labor Statistics. It offers information on the state of employment in the United States, i.e. the farm employees, private household employees, government employees, and employees of nonprofit organizations etc. The most important indicator this affects is the US Non-Farm Employment Change.
What is This NFP Report?
Currency pairs (especially those involving the US Dollar) usually see huge price movements in a matter of heavy volativity inflections. And this generally occurs within an hour or two of releasing of the NFP data.
So here’s what you need to know about NFP:
It is a measure of the quantity of jobs added or reduced from the US economy in the last month. You can look for it at the US Department of Labor website, available 8:30 EST, first Friday of each month.
The NFP Report is THE most important indicator of employment in the economy.
It offers a birds-eye look at the fitness of the US economy overall, and the labor market specifically.
Currency traders all over the world highly anticipate the release of the NFP report due to massive volatility and extreme increases in price fluctuation. Strong Numbers reflect a healthier U.S. Dollar which can cause currency traders to buy dollars. Weaker Numbers can reflect a weakened U.S. dollar which can cause currency traders to sell dollars.
NFP influences the perception prevalent in current market. Think of it this way, if a strong U.S. NFP number shows over 200,000 jobs added which beats expectation; it encourages FX traders to buy U.S. dollar weighted currencies. Less than 100K jobs show contraction within the U.S. labor market and this discourages traders from buying U.S. dollar weighted currencies. Also this weaker non-farm payroll release will lead to FX Traders selling U.S. dollars.
How NFP affects the US Dollar
The NFP release affects the direction of the US dollars. Forex traders in search of market-moving data are often found trading NFP for good reason.
Just like a stock rises after a company releases their powerful financial reports, a country’s stock i.e. the local currency (US dollar in case of United States) also rises with positive news in NFP.
On the other hand, a feeble NFP report points towards a weaker labor market than what the markets predicted, and a bad reading can push the dollar lower than other currencies. And that’s why Forex traders should always have a solid trade plan preparation leading to positive outcomes. Take your time to study the following major economic reports as a precursor to the release of the NFP report.
Other Key Economic Indicator Shows Temperature of U.S. Labor Market
Currency traders can gain potential insight or a heads up on what the NFP numbers reflect by paying close attention to the following:
- ISM Manufacturing Survey– This is a manufacturing report that reflects the general direction of manufacturing companies. A number higher than 50 shows growth in employment and less than 50 shows contractions.
- ADP Employment Report– This report is released ahead of NFP indicates the trends and conditions within private business sectors.
- Weekly Report tracking claimers of unemployment benefits– Gives strong insights in to the U.S. Labor markets as well as the Four week moving average.
Be aware of the risk involved
When trading the non-farm payroll release, please be aware that there is usually an incredible amount of risk involved due extreme volatility. This in turn produces vast uncertainty within the markets. It is a prudent rule of thought to wait until the market has properly digested numbers, whereby constituting a clear and concise direction.
Furthermore, forex traders may want to consider the prices action along with all matters of risk verses the reward, utilizing sound risk management strategies before executing trades.
Final Word – Always Practice before Live Trading
Since EUR/USD or any US currency pair, won’t act the same after every NFP report, it will take some practice to understand how your trade setups will play out. Be swift enough to jump in to the action and trade your currency quickly. Find a strategy you are comfortable with, and practice it with a demo account until you are confident in your skills.
Learn More about Non-Farm Payroll Reports and News Forex Trading
The good news is that these, and other Forex trading subjects, can be made easier-to-understand for novice traders, who are just starting their Forex trading venture. NewMovesMarketsForex is an up-and-coming 24/7 news portal for Forex traders, providing in-depth guidance and information to help you make better, and more profitable sense of your trades. Head on over their website today!