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Finding Forex Broker

Investor categories and how to find a good forex broker

Forex trading has gained enormous popularity over the past few years, much of it due to frustrated investors searching for a more accommodating medium of investment. Stocks have lost their luster during the recession unless your approach has been more like a trader than a long-term investor. As newcomers to forex have learned very quickly, there are high-risk profiles that must be addressed, and one must be adept at both fundamental and technical analysis or risk disaster at every turn. In the forex domain, these two analytical tools are your partners, working synergistically for your ultimate success in forex trading.

Two categories of investors

Investors from the world of stocks and bonds generally fall into two categories. There are those that prefer to research their investment options to a high degree up front and then buy and hold for the long-term, perhaps disposing of their weak performers from time to time and fine tuning their portfolios to ensure prudent diversification.

Investment brokers will manage your investment portfolio
The foreign exchange or currency trading must take place via properly accredited investment broker
or a broker company, to be scam-free. 
(Image by Pixabay.com)

The second type recoils from this “plodding” process. He is more action oriented and prefers to actively manage his portfolio, entering and exiting the market at will, always ready to pounce on a short-term opportunity. The former traditionally relies on fundamental analysis, while the latter is joined at the hip with technical analytical methods of investing.

In forex trading, these distinctions quickly blur. If a trader ignores the potential for disruption that fundamental economic data releases can cause, then he misses both an opportunity to grab onto a predominant trend or, worse yet, he may be blindsided by an immediate reversal in pricing behavior that his awareness could have prevented with proper planning.

Experienced traders learn early on to keep schedules of potential release dates and times for the government agencies in the countries of their respectively chosen currency pairs.

Finding a good forex broker

Currencies trading
The Forex markets involve trading currencies on the open market internationally.
The forex broker reviews often point you towards the brokers that provide quality customer support, including current schedules of key events. By necessity, volume and volatility naturally increase around these key dates and times, and brokers must prepare for the avalanche accordingly.

The best ones increase their server capacity for these periods in order to maintain efficient order execution. Others accept the overloaded condition as a cost of doing business and even exempt their responsibility for executing on a timely basis during these critical events.

Trading on the news strategy

Trading on the news is one of the first forex strategies taught in a structured forex course. There are many data releases that can be classified as “market movers”. Interest rates, GDP growth, consumer confidence, and pricing data are a few.

However, for the past few years, the release that guarantees a 50 to 200-pip move in relative rates compared to the U.S. Dollar is anything related to employment. The Department of Labor releases its report for the previous month on the first Friday of every month at 8:30 EST in the morning.

Forex markets initially “stall” in anticipation of this data release with perhaps some minor movement in one direction that reflects the “mood” of the majority of traders. There is a bit of jostling after the immediate release by those that are attempting to guess the eventual direction of the impending trend, but it generally takes forty-five minutes for analysts to read, assimilate, and develop an opinion about the data.

At that point, the majority becomes a plurality, and a definite trend line forms, lasting upwards of a few hours before leveling off at a new equilibrium. Technical indicators are used to guide your entry and exit.

Trading on the news requires fundamental and technical analytical support, as do most all other forex strategies.

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"Money is not an invention of the State. It is not the product of a legislative act. Even the sanction of political authority is not necessary for its existence. Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the State."

Carl Menger - the founder of the Austrian school of economics