How Doing a Simple Sum Can Make the Difference Between Being On the Right or Wrong Side of a Trade

09/10/2014 9:00 am EST

Focus: FOREX

Ryan Littlestone of ForexLive.com discusses the basics of fundamentals in forex trading and how sometimes the best win is, quite simply, not a loss.

Even if you are a straight technical trader you can’t ignore the fundamentals, even at their most basic. You live them and breathe them in everyday life.

An easy way of using a simple view of a market or currency pair is to add up the pros and cons for direction.  A few months ago the pound could do no wrong. We had rate expectations, good data and on the other side we had the US economy doing ok but with no real thoughts about US interest rates.

Look at it now. It can’t buy a bounce. Why? The economy is hitting a rough patch, Scotland fears, US economic strength, versus possible spring rate rises. That’s a 3-on-1 negative to positive.

Sometimes seeking direction is just a simple sum of what is going for or against a currency. It’s doesn’t tell you where to buy or sell but at the very least it gives you a bias and a reason for moves that otherwise would leave you scratching your head. I said a few times last week that I wasn’t ready to buy the pound and the subsequent moves endorsed that view. While I didn’t make money on those thoughts, more importantly I didn’t lose money. The time to change direction is when the sum changes.
Sometimes the best win is not losing.

By Ryan Littlestone of ForexLive.com

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