Forex trading and world events

Forex prices is very sensitive to the world news and events happening everyday. The more chaotic the event the more higher the risk a Forex trader must face, or the better the rewards

There are advantages when comes to Forex trading and or course the obvious one is the reward in term of money or profits. But Forex trading is always not an easy task, you need to first acquire knowledge to trade in Forex market.

In general there are two kinds of analysis you can perform on the Forex markets. They are known as technical analysis and fundamental analysis. Generally you need both of them if order to be successful.

Technical Forex traders base their trading on the analysis of the charts and indicators, while fundamentalist are based on the fundamental numbers and economical indicators of the countries to gauge the actual currency value compared to the other.

This risky situation is that when unprecedented  chaotic world events start to develop as the trading day goes on. The power of the media (tv, internet, printed) can magnify and sometimes it may even distort the events taking place and impacting the trading journey in a significant manner. The result of this magnification and rapid diffusion of the news about the series of unfavorable events taking place is an increased atmosphere of fear, confusion and uncertainty in the trading world. And fearful traders are not prone to make the best trading choices because they have given themselves to panic and emotional reactions instead of reasoned and intelligent decisions.

If you need to have more specific examples of these kind of events you can search a bit inside your memories and consider the impact of just a few types of unfavorable chaotic world events as the political upheavals or corporate scandals of companies as; Enron, WorldCom, or of people as the case of Martha Stewart trial, etc. There is also the example of the terrorist attacks on  Sep 11 in New York, March 11 in Spain, etc.  Also natural disasters: tsunamis, earthquakes, floods, freezes, droughts, hurricanes  along with wars can cause great disruption in a trading journey.

In short, every forex trader should be totally sure that his method of trading has built-in safe guards (stops, limit orders) to prevent a major financial loss from his trading account in case any of the unfavorable events I mentioned above ever  takes place. And being realistic, many of those events will surely happen in the future.