All professional traders understand these 4 points.

The first two points are slightly general, but the 3rd and 4th points are extremely underrated which makes traders profitable in the long run sustainably.

Let’s start …

Selecting a Currency Pair

All currency has a pairing. For example EUR/USD.

The first currency (left side) is known as a base currency; While the second currency (right side) is known as the quote currency. At the moment of writing, the price of EUR/USD is 1.01351. This means that the value of 1 EUR is equivalent to USD 1.01351.

Selecting a few specific pairings to trade will allow you to have priorities in studying relevant updates or news that will influence its price action of it.

Going Long or Short

You will be seeing these terms often ‘long’, ‘short’.

A long position simply means that you will benefit when the market goes up; A short position means that you will benefit when the market goes down instead.

Sometimes ‘long’ referred to ‘buy’; While ‘short’ refers to a ‘sell’.

This is why the forex market is such popular, both directions of the market will allow traders to profit.

Selecting a Timeframe

As you may hear, there are several types of traders in the trading community based on the timeframe that they trade. Generally, different timeframes require different strategies, risks, and profit levels.

The timeframe used will also influence the trading indicators that you are learning from Youtube.

Selecting a suitable timeframe to trade for yourself can sometimes be obvious. If you are a busy person and could only trade maybe once a day, a 1hour timeframe would suit you. It takes 24 candles to complete a single day, thus you would therefore have a chance to enter and exit. This is also known as the intraday trader.

The Importance of Time Zone

Timezone plays a crucial role in forex trading, it creates volatility in the market and thus bigger risk, or reward.

Forex is a 24-hour market (excluding weekends, and some public holidays). Different major markets open and close at different times, which contributes to the volatility.

Below is a table with 4 major timezones in GMT.

Conclusion

Forex trading is a very volatile market, and understanding these basics would build a good fundamental strength for your trading strategy.

If you somehow believe that there is a single best indicator in the world, think twice. You might be wrong. Try to observe, that the profitable traders in the market are the ones who understand and leverage these fundamentals above; They even don’t use any indicators besides naked charts.

Have fun trading!

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