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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.

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

How to use that report? 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.

The Forex market is considered the largest market in the world with the volume of trading that amounts to around USD 1.5 trillion every day. The activities in this market are mostly speculative, with a small portion representing governments’ and banks’ fundamental currency conversion needs.

Add the volume of activities of all the domestic trading exchanges and even then the Forex transaction on an average day is more than this combined value. This is why so many people wabt to make money trading currency today.

In its trading nature Forex market resembles an OTC or over the counter market, it means that trading takes place directly between the two parties whether over the telephone or on electronic networks all over the world. That’s why of trading centers, the Forex market remains operative 24-hour all through the week.

The Forex trading used to be the monopoly of financial giants and a few selective big time traders till that time when globalization and internet has thrown open the market to common traders. A first time trader, except a sharp intuition and predicting abilities, needs also some basic training in the major terms of Forex trading.

In order to make your learning and further aim to make money trading currency easier you must know the following basic Forex terms:

Spot - The Forex market is described as the spot market as the trades are settled instantly, “on the spot” and in real life it amounts to two banking days.

Spread - The spread is the difference between the price at which you sold the currency and the price you have bought them.

Pips - It is the basic unit for measuring a cross price quote changes. Consider this instance, where EUR USD is quoted at a bid price of 0.9875 and an ask price of 0.9878. The difference is USD 0.0003, which is equal to 3 “pips”.

Margin Trading - Foreign exchange is normally traded on margin which is rather high.

In Forex market you are always trading on a combination of two currencies which are called Base Currency and Variable Currency. Here is a simple example: you buy US dollars and sell Euro, so it means that you have to speculate on the assumption of comparative strength and weaknesses of the any two currencies in order to make profit.

If you don’t dare to take risks Forex market is perfect for you but if you really want to achieve success in this business you must have some basic minimum education otherwise you will simply fail.

Read these free Forex signal choosing tips to make sure that you can make a wise choice.