Foundation #1: I highly recommend that you follow 1 or maybe 2 major currency pairs. It gets far too complicated to keep tabs on all four. I also recommend that traders choose one of the majors because the spread is the best and they are the most liquid. I personally follow only USD/CHF because it moves the most every day.
Foundation #2: Follow and understand the daily Forex News and Analysis of the professional currency analysts. Even though this system is based solely on technical analysis of charts, it is important to get a birds-eye view of the currency markets and the news that affects the prices. It is also important that you know and understand what the key technical ‘support’ and ‘resistance’ levels are in the currency pair that you want to trade. Support is a predicted level to buy (where currency pair should move up on the charts), resistance is a predicted level to sell (where the currency pair should move down on the charts). 3 Fortunately, all the best Forex news and analysis is offered free on the Internet. Here is what you should do first:
*While you are reading the daily news and technical analysis, write down on a piece of paper what direction the analysts are saying about the major currency pair you are following and the key support and resistance levels for the day.
A. Go to www.forexnews.com and you will find 24hr news and analysis on the spot FX markets. The site will give you the big picture of how the economic calendar and central banks affect the currency markets. A great resource.
B. Next visit Commerzbank’s Daily Market Technicals here: www.commerzbank.com/upload/dailye.pdf This daily commentary gives you supports and resistances and predicted direction of the major currency pairs and crosses. One of the best.
C. Then go to www.fxstreet.com and click on the ‘Top Forex Reports’. Here there is a wonderful listing of all the major daily currency analysis and forecasts with support and resistance and direction forecasts.
D. Click on www.currencypro.com and go to ‘Today’s Market Research’ and there you will find more excellent analysis on the Major Currency pairs. Another great Forex Portal.
Foundation #3: Only get into a trade when the FPS technical indicators say when. Always trade with stop losses! It is important when you are trading Forex, to be disciplined and to stick to a plan. Don’t just trade your ‘gut’ feeling. Use the technical indicators outlined and always enter in stop losses on every trade.
Foundation #4: Practice makes perfect. As they say, there is no substitute for hard work and diligence. Practice this system on a demo account and pretend the virtual money is your own real money. Do not open a live trading account until you are profitable trading on a demo account. Stick to the plan and you can be successful.
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