Every day, billions of pounds, euros and dollars are traded on the Forex markets. The foreign exchange markets provide an opportunity to make money by buying a currency when it has a low value, and exchanging it again when its market value has recovered.
The values of currencies can change greatly in response to a number of factors, including world events and the release of government and business reports. Forex traders can make quick profits from this by anticipating the changes in the markets and buying a currency before its value increases.
Here is a quick guide on ways to use the news and current events to create profitable opportunities on the foreign exchange markets, so you too can take advantage of this fast growing and popular investment strategy.
Know Your Trades – The Directional Bias
One of the most common and profitable ways to trade on forex markets is with a ‘directional bias’.
Having a directional bias refers to when you expect a market to move in a particular direction when an upcoming report is released, or a scheduled event takes place that has the power to influence the foreign exchange markets.
An election is a good example of this, as the results of a government election can change the value of a country’s currency. A forex trader who is confident on the result of an election can buy currency based on the movement in the market they expect when the winner is announced, often reaping huge profits when they do so.
The Non-Directional Bias – When You Know a Change is Coming
A non-directional bias trade is when you know that some big news is going to create a big change in the market, but you don’t know which direction currency prices will move.
With these trades, timing is the most important factor. You have no bias towards which way the market will move, but you need to be there when it does in order to make the right timely trades to make a profit. With this type of trading, you need several strategies planned, so when the market turns in whichever direction, you have a plan in place and know what to do.
How Do I Get Involved with Forex Trading?
Anyone can start forex trading, but you are going to need to find a foreign exchange broker to help you make the trades and advise you.
If you are having difficulty choosing a forex broker from all the options out there, a good idea is to check online reviews and reports from other people just like you who have decided to start forex trading as a part of their investment strategy. You should also research the history of any broker you are interested in and see what level of success they have had in the past, and what the type of services they offer to their clients.
With the right strategy, information and help, anyone can begin to trade on the foreign exchange markets and begin to build themselves a profitable portfolio of trades.