Forex trading is becoming increasingly popular every year and the Forex market is the largest in the world with approximately $4 trillion traded every working day.  This liquidity and the fact that many of the market participants utilise technical analysis techniques means that trading price action on the Forex gives many opportunities to profit from market moves.

Many traders try to use economic data releases to trigger their Forex trades but the problem with this method is that often the market has already priced in data.  The old saying “buy the rumour sell the news” has a lot of truth in it.  Forex currencies will often move in opposite directions than would be expected when economic news is released.  A difficult environment to trade in…

So how does one trade Forex?

Technical traders believe that everything the market knows about a particular instrument is represented in the price charts and therefore the price action.  If the market constantly hits an area and bounces from the same level we are seeing support and resistance in play.  This is the base information that is required to trade price action on the Forex.  We do not understand, or pretend to understand, why the market is doing this.  It is plain to see that market forces are moving the price away from an area and therefore a certain amount of supply or demand is evident.

Once a Forex trader learns how to identify these high probability support and resistance areas further techniques can be utilised to gain an edge on the market and therefore make a profit.  My Forex trading blog has real world examples of how I trade the Forex markets on a daily basis.  New traders can benefit from watching more experienced Forex trading practitioners at work.

If anybody wants to learn how to trade Forex price action it is prudent to begin with a demo account and paper trade until an edge has been proved.  This will remove any pressure to make a profit while the inevitable learning curve is being run through.  With a patient approach and common sense application of tried and tested robust techniques there is potential to break into the Forex trading arena.


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