How to know when to buy and sell forex? This is a question of billions of dollars!
The answer is simple. There is no perfect time to buy or sell any asset or there is no perfect strategy that can bring you to profit easily. Traders can try to find the secret pattern or make any benefit using market inefficiency. Based on scientific researchers, a combination of fundamental and technical analysis in the longterm run brings the biggest profit. But in practice and my trading experience, I met traders that created huge profits using daily trading, scalping methods, arbitrage, High-frequency trading, etc. So the trading time frame and style are not important for success in trading.
If we want to learn when to buy and sell in forex first we need to know base terms.
What buying and selling on forex means
When it comes to the purchasing and selling of pairs on forex, this entails conducting an estimation of an appreciation or depreciation concerning the value of one type of currency in comparison to another type of currency. This may include the usage of fundamental analysis or even a technical analysis to serve as a deciding factor if a trade should be performed. When it is realized that this has been developed, then the trader will move on to considering other aspects. It is important to think of primary entry and exit levels, along with issues regarding risk management.
No consideration is being given to the pair of currency for EUR/USD concerning when it is good to engage in the process of buying and selling on forex. If you desire to conduct the purchase of the EUR/USD pair of currency, you will likely make a profit if there is an increase in the value of the EUR, which means there would be an increase in the USD when there is the selling of the trade. This is also based on the amount of the commission and other related fees which will be deducted from the amount earned. A trader in this scenario would be engaging in the purchasing of the Euro and conducting the sale of the USD at the exact same session. For example, a technical trader can have its own strategy. For this scenario, it is realized that there was the application of the perspective that is technical. The entry-level indicated that the morning star candlestick pattern portrayed a possible point of entry, which was supported by the usage of the RSI indicator that showcased a signal indicating overselling. Then the exit level was based on the usage of the primary pricing levels in order to establish the profit level that would be achieved.
In terms of matters pertaining to the buying and selling of trades on the forex markets, it cannot be denied that traders do possess styles as well as approaches that are distinct from each other. This is based on the principle that the forex market possesses a high level of liquidity in comparison to many other markets on the globe. This means that the truth is that there is not only one way to conduct trades on the forex.
Understanding when to conduct the buying and selling of trades is based on several elements. But the reality is that there seems to be increased volume in such times that markets experience a higher level of volatility due to the fact of being linked to an augmented level of risk.
When to Buy and When to Sell when you trade long term trades
On buying and selling time there is a strong influence of political events. If a government is experiencing instability, if there is the presence of political corruption or even changeovers that are implemented within the government framework can make an impact concerning how much value a pair of currency possesses. Moreover, economic policy plays an integral role here. Many traders on forex watch for unemployment rates, monetary policies, GDP as well as fiscal policies, which are noted as affecting the value of pairs of currency. Then finally technical analysis also is recognized as strongly holding influence over the value determination of pairs of currency. Those who are considered to be technical traders hold a high preference for primary levels of pricing where there is the presence of support and resistance. They also keep an eye on trends and other valued indicators in order to derive a foundation for conducting trades on the forex.
So how will you make trading decisions? The rule is simple :
You as a trader need to make estimation or projection how will fundamental factors make an impact in the future. Your plan does not need to be right but needs to be your edge, your need to have opinion. Your observation, your opinion matters.
In his books, George Soros talks about investor ability to imagine the future sequence of events in the financial market. The market will not react to the good news because the news is good. The market price will react if the future expectation is good or better than expected. Here we talk about the main trend, several weeks trend – longer-term trades.
The next rule is that you need to have several triggers when you want to choose a good time to buy or sell. If the fundamental analysis shows one thing and price shows the opposite direction – you need to wait. Evan, you use technical analysis and indicators you want to see those different indicators show the same direction. For example, you want to see that your oscillator, volume indicator, and divergence show the same direction before you enter into trade. Of course, it depends on your strategy.
When to Buy and When to Sell when you trade short time trades
In this case, fundamental analysis has a smaller impact and technical analysis have a bigger impact on your decision. Fundamental analysis wants patience trader who is ready to wait weeks to make a profit.
The most important thing in a short time trading is the trading journal where you will write moments when you make the most mistakes. The best approach is to learn when not to trade. I know short time traders that do not like to trade on Mondays or Fridays or during the important events during the Asian session or etc. So each strategy or each trading personality has its own bad trading timing and we need to learn to avoid bad trading time for our own strategy.
The best approach is testing your strategy on the new test dataset, and then to improve your system based on past performance.