Approaches to Forex Trading

There are 3 main approaches to trading the currency markets:

1. Fundamental
2. Technical
3. Gambling

Let's talk about the gambler's approach. This is the method of "trading" of those who "think" that, for example, the euro is going to go up. Other gambling types "think" the euro is going to go down.

What both have in common is that they don't even try to analyze the market, and they don't have a strategy. Forex gamblers always lose in the end. Even so, it's possible you meet forex gamblers who haven't had a single loss in a month or two and are exhilarated with their trading "abilities". Most losers have seen their accounts grow at some point in time. To be successful in forex trading means to be profitable in the long-run. For example, if you open an account today and in 3 or 4 years are in the green, you could call yourself a good trader.

Actually, there's nothing bad about 'playing forex' and 'betting' on the euro, the dollar or the Vietnamese dong provided that you are aware of what you're doing, namely leaving yourself to the vagaries of randomness. For those who would like forex trading to be more than a game of luck, the other two approaches are more appropriate.

The advocates of technical analysis consider themselves better than fundamental analysts. You will notice the squabbles between these two groups in forex forums (frequently peppered with loads of swearwords). The truth, as usual, is somewhere in the middle - these days you can't ignore either fundamental or technical analysis.