Currencies are very important in today’s world. As globalization spreads, so does the need for inter-country currency movements. A good way to look at it is to consider a company like Facebook that is used around the world.
Anyone can advertise on Facebook to get more followers or likes!
Therefore, for a person in Kenya to advertise in Facebook, the money needs to be converted from shillings to dollars. The same is true among other industries. As a result, trillions of dollars change hands every day.
This creates huge opportunities for traders who benefit from the movements of these currencies.
The currency pairs
There are hundreds of currency pairs that traders can take advantage of. At DTTW, our platform provides you with access to these pairs among other trading instruments.
To make more money, you need to trade in currencies that are popular. Their popularity creates volatility which helps to ensure big movements.
The most popular pairs are from the developed countries like the United States, Canada, United Kingdom, and the European Union. Specializing in currencies like South African Rand that don’t have much demand is not the best thing to do.
→The Best Currency Pairs to Trade
Understand what moves the pairs
There are many reasons why currency pairs move up and down. Some move because of the improvement economic conditions in their countries. In other times, currencies move after the announcement of a major M&A deal.
Other times, they move because of political reasons.
A good example is what happened after the U.S. election. Donald Trump who had campaigned on an anti-Mexico rhetoric won and many investors thought that the Mexican economy would collapse. The Mexican Peso deteriorated as more investors moved their money to other countries.
However, as the rhetoric has reduced, the currency is now in recovery mode.
In other times, currencies move for no apparent reason. This is especially when traders rely on technical analysis.
Understand the technical and fundamental analysis
To make currencies trading successfully, it is very important for you to understand the technical and fundamental analysis. In simple terms, the fundamental analysis refers to the way the economy is performing.
Traders look at the release of economic data with enthusiasm. They want to know whether the country’s economy is doing well or not. Investors want to have their money in countries that are doing well.
Therefore, if the economic data is positive about the United States, they will often invest their money in the country, leading to a high demand in dollars. This pushes its price up.
If you want to succeed as a trader, it is very important for you to understand how to interpret the economic data.
Another important aspect that you need to know as a currencies trader is technical analysis. This is an analysis type that involves studying the trends in company’s data. It involves using a combination of technical indicators to predict the future movements of the company.
As a day trader, this is a skill you must learn. You must be ready and willing to master several indicators like moving averages and stochastics if you want to succeed.
Know when to buy and when to sell
This is something that no one can be an expert in. As you already know, all traders, including the most successful ones have made mistakes in their careers. They make these mistakes because they don’t have a specific period of when to buy and when to sell.
However, by following certain principles you can succeed as a good currency trader. For example, you should create a technical indicators template that tells you when to buy and when to short.
Although it will not always be correct, it will help you make good and consistent trading decisions.
You can train and improve this skill using our platform.