How to get an edge in forex?

Many people are loosing in Forex. In trading forex are costs involved. Deposits and withdrawals cost several percent in many cases. Other costs involve inactivity fees. Last but not least are the commissions which are included in the difference between the Bid and Ask and Swaps at many brokers. In forex trading you deal with interest rates. You deal the interest rate from one country against the interest rate of another country. If you are holding a position you get paid or have to pay the difference of interest rates. This is what swaps are doing.

So the edge must be big enough to cover the costs which are involved in forex trading. Two main approaches are the technical and fundamental analysis.

The technical analysis is about analyzing the market by price. For instance if a market was going up for a longer period, the market is overbought. In that condition it's more likely that the market goes down. If the market is down, it's oversold. Then it's more likely that the market goes up.

The fundamental analysis is about analyzing fundamental numbers. For instance the comparison of purchasing power or interest rates of two different countries belongs to fundamental analysis. If you can buy in one country domestic products for twice as much than in another country, the currency should be valued higher.

High Frequency Trading is part of technical analysis, because in such short timeframes only technicals are important. For further information see my post about an introduction to High Frequency Trading.

If you you wanna get an edge through technical analysis you have to know which indicators work. Is the market more trending or mean reverting? What is the difference between many timeframes? Is the  volatility constant over time or not? These are the questions that have to be answered. Many scientist say that the returns are randomn. You can't forecast it. Others say you can.

For the fundamental analysis you have to study the numbers. They are published on many websites for free. How does the price react to fundamentals? If important news come out increased volatility is expected. Therefore many traders are watching the Economic Calender closely. One of the most volatile events is Non-Farm Payrolls. The NFP have a great impact on all currencies.