Forex Options Trading - Catch the Forex Market Wave

Predicting what will happen in the Foreign Exchange market can prove to be a difficult yet necessary task. If you are successful in predicting what will happen in the forex market then you will surely make some cash. With that in mind, there are a number of different tools which you can use in order to try and accurately predict this financial market. These are essential skills that any trader should hone even before they start to trade.

One particular tool in trying to predict the market which is becoming quite popular is the forex charts. These charts show the movements of the market in the past and using the concept that history would repeat itself, the trader would try and predict what will happen tomorrow based on yesterday. It is said that the market movements shown in charts look like waves and that these waves move in repetitive patters; this is called the Elliot Wave Theory.

Basically what the Elliot Wave Theory suggests is that there are eight waves; the first five are called impulse waves which happen due to impulsive purchasing of traders and the last three are called corrective waves. Basically what happens in the first five waves is a gradual climb or descent and this is put back into place by the last three waves.

This can help any trader understand the movements of the market even more; and with more knowledge and skill a trader can improve his or her accuracy when it comes to predicting the forex market.