Forex trading is all about speculating about the movements of pairs of currencies. However, investors who place their bets based upon emotions or hunch feelings are the ones who lament afterwards. Yes, the prices of a currency relative to another currency are dependent upon many factors and it is hard to predict the movement of a currency. However, if you know how to identify and interpret a trend, you have won half the battle as there is a high chance that prices for the currency pair may move again in the same manner as what happened in the past. If you can identify a particular trend by following the movements of two currencies relative to each other, you can easily predict what is going to happen and earn a profit through your trades more consistently.
You will know the direction in which the pair of currencies will move if you have correctly identified a trend. If the trend is moving upwards implying the price of one of the currencies is increasing, buying the other one will allow you to book more profits. On the other hand, selling the other currency is the way to go if the currency price is going downwards. There are many different patterns that are made by the movements of the pairs of currencies. Even if it has been an uptrend, there can be a series of peaks and higher valleys giving you a clue as to what is going to happen in the next few days. Similarly, in a downtrend, you will encounter smaller peaks and valleys. In such a situation, it is better to sell off the currency pair after booking a profit.
Your goal as an investor is to spot a trend from the movement of the currency pairs and trade or invest accordingly so that you can gain from it. If identifying trends and investing according to these trends is all it takes to be a successful trader, you got to be able to interpret the trends. This is possible through two different types of Forex analysis. The first is called fundamental analysis and in the Forex world this involves an understanding of macro economics and world events and how such events affect the price of oil; and the second is referred to as technical analysis which just looks at price action.
Learn to identify the correct Forex trend today and you may make money from Forex time and time again.