Forex Trading – When To Buy And When To Sell

The position that you take is profitable when you buy a strong currency against the weak currency. It is thus important that you should understand when and where to buy and when and where to sell so that you are able to structure the trade properly. This Site explains it in detail.



When should you have a bullish outlook?

To enter into a long trade in the currency pair you will need to have some reason why you are bullish on a particular currency. You could form an opinion by using fundamental or technical analysis. However, the professional traders use a bit of both to increase the probability of the trade working out. The fundamental analysts look at the economic reports and the expectations of the forthcoming economic report to have an opinion on the currency pair.

Like, for example, suppose the GDP numbers are about to come out for a country and the analysts expect that the GDP number is likely to be weaker than what was in the previous quarter. The report gets released and the numbers turn out to be better. The numbers cause the currency to move up and those who were in a short position now need to reverse their position.

When should you have a bearish outlook?

For example, the employment number is out for a country and the analysts expected that the numbers would be stronger than the last quarter. The report however stated otherwise and the numbers were weaker than the last quarter. This changes the outlook in the market and the traders who were long in the currency of that country have to reverse their positions now. This causes a bearish outlook to get formed for the particular currency.

Combining the information in the market

There is a lot of information in the market and one need to combine them to trade in the currency pairs. In the above examples, the economic report gave a bullish outlook and this helps to fuel the bullish move and causes the prices to move much higher.

This is the time when you should buy the currency.

At the same time, the employment rates came weaker for another country and this currency loses strength. It even started to break the major support levels. This indicates that a bearish move is likely and the traders sell this particular currency.

In such cases, the Forex trader should look at a currency pair that combines both the currencies.