Forex Trading Strategies | Forex Market Analysis - Inveslo

Learn How Financial Markets Work

Gain insights on how the financial markets work, what moves them, economic events & news, and market analysis, to plan your trades more effectively.

forex trading strategy
forex trading strategy

The economy's overall health is measured by factors like GDP growth, sectors growth, trade balances, inflation, and employment data. These are known as macroeconomic data that affect the value of currencies in the big picture. Generally speaking, the healthier the economy, the stronger the currency is. Furthermore, companies financial statements, industries developments, demand and supply reports, known as microeconomic data, play a key role in driving commodity, bond and stock markets.

forex events news
monetary policy

Central banks' decisions on interest rate levels and quantitative easing impact the money supply, which does not affect only the currency markets but the other securities such as bonds, stocks and commodities.

The political landscape, such as government interventions, elections, local or international conflicts and any other environmental events with uncertain outcomes, can affect the relative securities in value.

political news
  • Microeconomic events and news

    Companies reports, Dividends, industry development

  • Macroeconomic events and news

    GDP, CPI, NFP, Retail sales, JOLT, Jobless claims, Trade balance

  • Central banks decisions

    Interest rates, FOMC statement, QE

  • Political and environmental events

    Election, Hurricane, War, rebellion, Government policies

  • Sentiment and market psychology

    PMI, IFO, business cycles, Trends

Traders use two common approaches to examine the future direction of the markets.

Fundamental analysis

Fundamental analysis refers to studying all financial, economic, political, and environmental factors that cause market movements to evaluate the intrinsic value of a particular instrument such as currency, stock, or commodity.

  • Fundamental analysis is broken down into macroeconomic analysis and microeconomic analysis.
  • Traders use these powerful methods for long run investments.
  • They go long on undervalued assets when they expect the relative market values will rise and go short on overvalued assets when they believe the prices will crash soon
forex market analysis
forex technical analysis

Technical analysis

Technical analysis is the method of identifying the effect of all relevant factors on market psychology through the study of market action.

  • Technical analysis assumes all available information, either known or unknown, is reflected in the price.
  • Following the price trends can eventually reveal the market psychology leading to the future direction of the market.
  • Traders use technical analysis to recognize the price patterns to spot the best trading opportunities.

Plan your trade

Each of which analysis methods you have chosen, you need to put your knowledge into action eventually. To do this, you essentially need to build up a trading plan that aims to keep you on track with your winning mindset.

A trading plan is a road map to success and consists of three components:

  • Trading strategy
  • Proper risk management
  • Discipline in trading
inveslo trading plan

After developing your trading strategy and applying proper risk management rules, it is time to practice discipline by sticking to your trading plan. Discipline is the key to being a successful trader, which is characterized as follows:

  • Have a trading schedule and watch relative news releases closely
  • Enter and exit the markets only when all conditions are met based on your trading strategy
  • Ensure to apply proper risk management
  • Stick to your stop-loss and take profit levels

Mastering discipline makes you control your common emotions like fear and greed to achieve a winning mindset.

  • Trade only high probability setups
  • Keep learning to develop your trading strategy
  • Control your fear by sticking to your stop loss in losing trades
  • Control your greed by sticking to your take profit levels in profitable trades
  • Trade confidently by applying proper risk management
  • Plan your trade and trade your plan