Useful Guide - Key Factors on the Forex Market

It is wrong to think that the market can be predicted and charts move to some higher force or that the fundamentals drive prices. If you want to win with your Forex trading strategy you need to understand what is really the key factor and helps to make money trading currency.

So the key factor is market sentiment, which is the views of all the traders added up and it equals price and many people totally misunderstand its importance.

Charts reflect the bullish or bearish sentiment to a degree - they show you the reality of what traders think - but they don't give you clues to the future of what humans may do next - that's why all the clever, mathematical, predictive theories do not work.

How to judge and trade sentiment?

The Net Traders Report from the CFTC is a great tool you can use and in addition it is free. You will get an idea of what traders are doing in currency.

Follow the Smart Money

Its real advantage is it gives you free access to what the smart money is doing and this is a huge advantage in making your Forex trading strategy work and understand the online trading how to.

With this report it is possible for you to see what 3 main groups are doing.

- The commercials

These are traders the who do it as hedging and their not motivated by greed and fear and know fair value

- Large Speculators

These are big individual traders and funds

- Small Speculators

These are all the rest of the traders

You should just to watch for the commercials to sell or buy heavily, when they are opposed by both speculator groups. The commercials move slowly as their hedging and only will do so when prices have shifted to far from fair value. They can be long at important market bottoms and short at market tops. So if you see big extremes you understand that a break is approaching. In order to use the report in is necessary to spit your set up and then move to your charts for confirmation. The Net Traders Report gives you the set up which shows when prices have moved to far from fair value and then you wait for the indication of a turn on your Forex charts and hit it.

It is normal, that once the market eases the speculators will get shaken out quickly, as they scramble to get out governed by their emotions, triggering a counter trend.

If you really want to win, you have to look at their actions - they will tell you when a market has moved to far from fair value and when greed and fear are creating a sentiment extreme and then you can hit the big contrary trades for big profits.

Read more about free Forex signal choice tips to ensure that you are using something of real quality.