Analyzing Currency Value Fluctuations
In order to learn Forex trading, you need to do more than compare Forex rates when selecting a trading platform. In order to make profitable trades, you must learn how to properly analyze factors that contribute to fluctuations in currency values. In simple terms: you have to accurately predict whether a currency is going to lose or gain in value so that you can trade accordingly.
There are two forms of analysis that will give you accurate predictions most of the time:
Technical Analysis: review the charts and other Forex tools available through your trading platform.
Fundamental Analysis: read industrial production reports, government-released economic indicator reports, and monitor changes in the Consumer Price Index, or CPI, in order to analyze the economic strength of a country.
When you notice changes in a country's economic stability, you can expect the currency used in that country to follow suit in most cases. Sometimes currencies gain or lose value for short periods of time, and other times they crash hard for the long term.
You now know what the Forex market is and have a basic understanding of what your job is as a trader, given you choose to accept the position. You must first understand that this elevated level of trading comes with occasional losses. Never invest money that you cannot afford to lose, especially while you are still learning the ropes and developing strategy.