FOREX trading 101

Today we are gonna start this lesson by analyzing some of the current currency trends.We'll start with the exchange rate of the dollar to the pound. The dollar is known to be a very strong currency meaning it is not subject to large losses and constant fluctuations in market value. The present dollar/pound ratio is as follows:
As of today the BPD/USD exchange rate is 1/1.57150 meaning the equivalent of one british pound is 1.57150 US dollars.

If at 2:00pm GMT the exchange rate was 1/1.57001 with a decrease of 0.00149 US dollars i would gain if i had analyzed that the market value of the dollar would rise at say current time 6:44pm GMT.On the other hand i would have lost if i had predicted the market value to depriciate. This is one very important aspect of the FOREX market that is understanding the factors that affect the rise and fall of the dollar and the seasons as well. I say seasons because in say December the dollar might lose value cause the British pound gained in percentage value on international trade and commodities such as gold, oil e.t.c.

To avoid misunderstanding the trends it is essential to make use of prediction software and of course real life practical analysis. The software analyzes the past and present trends in order to predict the future trends. The essence of real life analysis is to understand how the currency being studied shrinks or grows with time, season and the international economy as a whole.

Now we will move on to the basic FOREX forecast methods:

There are two, these are:

1.Technical Analysis: This is a method of predicting price movements and future market trends by studying what has occured in the past using charts. Technical analysis deals primarily with what has actually happened in the market, rather than what should happen, and takes into account the price of instruments and the volume of trading, and creates charts from that data as a primary tool, of course. The major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.

2. Fundamental Analysis: Is a method of predicting future price movements of a financial instrument based on economic, political, enviromental and other relevant factors, as well as data that will affect the basic supply and demand of whatever underlies the financial instrument. Practically, many market players make use of technical analysis in conjuction with fundamental analysis to determine their trading strategy.

Now you have an idea of what the next lesson would contain.