Forex Trade Research

Forex Trade Research

I've tried to find articles highlighting the importance of forex trade research but they are far and few in between. This lack of articles is in itself a little disconcerting. Trading, by its nature, is not static since the market ebb and flow is based on new information that's regularly introduced. This price movement is primarily a result of the news, both past present and expected future. Consistent research is, therefore, necessary to be prepared for opportunities that may arise at any time.

Why Should I do any Forex Trade Research?

The closest articles I could find on trading research were those on planning for your trades. This focus is what is missing in many forex traders mindset, the need for current ongoing information on the markets. I combine both technicals and fundamentals in my trades. Ongoing research is needed for both.

  • This research includes keeping up with present news, knowing the old news for a giving currency, knowing critical points from previous central bank statements, knowing new support and resistance levels, knowing overbought and oversold regions, and being aware of round number levels.
  • Without being aware of most of this information, you don't have an understanding of which way a currency pair may move and what its possible highs and lows are. This information has to be current and clear to you. Only with up to date information and information that you're clear about will result in you making a higher probability trade. 
  • You can feel in your gut when you've done enough research. Most of my drawdowns have happened after I spent insufficient time researching and making notes. Right decisions are a result of useful information, and lots of it so you can contrast and compare to chose the best response.

Forex Trade Research and Certainty

A sense of certainty is an essential part of trading since it determines whether you enter a trade or not, the amount you should risk, whether you continue to hold or not. A sense of certainty is a result of lots of evidence or confluences when lots of evidence comes together to suggest the same conclusion. 

This confluence might be several news articles reminding the reader of an upcoming expected rate hike, a high GDP number suggesting a rate hike and an ongoing trend supporting the direction of the likely rate hike.

When this sense of certainty is sought after, traders tend to become better managers of risk since they begin to favor trades that have a greater chance of working out. This sense of confidence is just another way of saying traders will tend to choose higher probability trades