The Number One Thing To Get Right In FX Trading
A question that we’ve had is what’s the number one thing to grasp in FX trading?
Now, obviously there’s a number of different things you need to grasp for successful FX trading.
However, the number one thing of all of those is probably this simple concept that once you understand, and I’m gonna show you this image to help it become clear, and this is the number one thing to really grasp. And that is in image, we see a strong arm arm wrestling a weaker arm.
So we have a strong arm and a weak arm and if we were to just look at that and say well, which arm is most likely to win that arm wrestle? We think most likely it will be the strong arm because there’s more strength and it has more pulling and pushing power to make the other arm go down. If you instead, of thinKing of arms, think of currencies, the number one thing to grasp in FX trading is we want to pair a strong currency against a weak currency.
Obviously, currencies are traded in pairs, so you’re trading one against another. So the key thing to grasp every single day and whether you’re trading on a daily basis or a weekly basis or even longer timeframes, you want to be pairing strength against weakness.
Once you’ve got that number one thing, that’s a real key to understanding the principles involved in trading and that what we’re doing every single day trying to pair weakness against strength. And the way you recognize the weakness and the strength is by looking at what the fundamental drivers of various currencies are.
That obviously changes from political reasons, central bank-driven reasons, even economic events and each day, week, month you begin to build up a picture of the strong currencies and the weak currencies and the idea is to pair those together.