Forex Education Series (with Videos)

How can I predict where exchange rates will go?

As any market, FX market is driven by supply and demand:

• If buyers exceed sellers, prices go up.
• If sellers outnumber buyers, prices go down.

There are many different factors which influence supply & demand for every particular currency and, consequently, its exchange rate vs. other currencies. For example, national economic performance matters a lot. If Australian GDP is higher than expected, with all things equal Australian dollar will appreciate versus its counterparts and you can make a profit on buying AUD/USD. You will find all important events in our economic calendar.

https://www.youtube.com/watch?v=zAw5-jlGF54

Moreover, there are so-called technical tools & indicators. When you see a currency pair chart in your trading terminal, it’s assumed that this chart reflects all information available to the market. As a result, you can use the previous price action to foresee the future. According to this concept, previous highs and lows represent important levels where the currency pair may linger and reverse. If such level is breached, a big move may follow and a big move means good profit opportunities. Moreover, you will be able to identify trends – rising, descending and sideways – and open your positions in direction of a trend getting profit. 

You can learn more about these things when you get started. Our analytics will be very helpful for this purpose.

FBS gets the 'Most transparent Forex broker 2018' award!

FBS gets the 'Most transparent Forex broker 2018' award!
Shares Magazine’s UK Forex Award choose FBS as the Most transparent Forex broker 2018

Transparency in Forex trading means an operating in an open and straightforward way, under reliable regulation, and keeping up with the strict financial standards. FBS faces all these requirements.

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Have you ever heard about one of the most mysterious and successful traders of all times – William Gann?

He is well-known for using geometry, astrology and ancient mathematic to predict the movement of quotes in the financial markets. He was brought up in an impoverished extended family.

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How can I predict where exchange rates will go?

Predicting exchange rate movements in the forex trading industry is a challenging task. It requires a combination of fundamental analysis, technical analysis, and understanding market dynamics. While it is impossible to predict with absolute certainty, traders employ various strategies to increase their probability of making accurate predictions.

Fundamental analysis involves studying economic indicators, central bank policies, and geopolitical factors that impact currencies. By analyzing factors such as GDP growth, inflation rates, interest rates, employment data, and political developments, traders can gain insights into the overall health and direction of an economy. Positive economic indicators often lead to currency appreciation, while negative data can result in depreciation.

Technical analysis involves studying historical price patterns, trends, and chart indicators to identify potential future price movements. Traders use tools like support and resistance levels, moving averages, oscillators, and chart patterns to find entry and exit points. Technical analysis helps identify trends, breakouts, and potential reversals in the market.

Additionally, traders use a combination of quantitative models and algorithmic trading systems to identify patterns and correlations in historical data. These models use statistical analysis and complex algorithms to uncover relationships and make predictions based on historical patterns.

Market sentiment and investor psychology also play a role in predicting exchange rate movements. Traders analyze market sentiment indicators, such as the Fear and Greed Index or surveys of market participants, to gauge market sentiment. Positive sentiment can lead to currency appreciation, while negative sentiment can result in depreciation.

Risk management is essential when making predictions. Traders should use stop-loss orders to limit potential losses and employ proper position sizing techniques to manage risk effectively.

It's important to continuously stay informed about economic news, central bank announcements, and geopolitical developments that can impact exchange rates. Traders need to follow economic calendars, news sources, and analysis platforms to stay updated.

While predicting exchange rates is challenging, traders should approach it with a realistic mindset. It is crucial to understand that no strategy can predict with 100% accuracy. The forex market is influenced by a multitude of factors, and unexpected events can cause volatility and disrupt predictions.

To enhance prediction accuracy, traders should continuously learn and refine their strategies. Analyzing past trades, keeping a trading journal, and seeking insights from experienced traders can provide valuable lessons and improve decision-making skills.

Ultimately, predicting exchange rate movements in forex trading requires a comprehensive approach that combines fundamental analysis, technical analysis, market sentiment, and risk management. By leveraging these tools and staying informed, traders can increase their chances of making accurate predictions and achieving success in the forex market.