What are some particulars about the Forex Markets that make it different from others?

Concerning technical analyses and the way fundamentals work, what makes the Forex market unique and how do you think one should attune their trading to incorporate that uniqueness and take advantage of it?

I ask this because I have read many general trading books, that teach certain principles that may or may not be optimal for forex trading. I am a trend trader, and from my one year experience in the Forex market I now see that you can't sit on Forex positions for too long, because fundamental changes can cause massive changes in price. I'm having trouble synthesizing all my experience and knowledge into some practical principles for trading Forex, especially when it comes to taking profit.

So what advice and input can you give? Thanks

If you compare forex with a stock for example.In one year this stock can loose 80% and nobody cares about this.
But it is impossible for a currency pair (except extreme political changes) to loose 80% in one year.

Thats the different.

You may try cutting back on the lot sizes just a tad. I had this trouble as well, I wanted to trade the major trend ... though the swings felt too big. Being that I am no "trading expert" or technical wizard, I had to adjust. As I thought about it more, I realized a 1.5% swing should never throw you out of a trending market that has trended 20% + in a matter of 18 months. However, with leverage, that 1.5% could feel like a 10.5% swing. Much stronger and certainly one needs to pay attention to this. You see what I mean? This is something that is healthy for the market, the 1.5% pullback, though with leverage it is a make or break account moment for many. If I can't personally exit and enter to better myself and my position, I have to make it so it is comfortable to stay in the trade throughout the whole process. If you leverage down a little, I personally use 5:1 all the way down to 2:1, you may find your trend trading much more enjoyable (and in the long term, profitable) of an experience. I have had positions short USD/ZAR since mid August last year. I have yet to get out of that trade, even with my profits cut nearly in half by recent long movement. I know it is a long term trend trade and if I get out to try and beat the market with my skills, I will likely never get back in.

Anyway, now I will answer your question. Hopefully I add a little bit of what you may be seeking in these responses. In regards to technical differences between forex and stocks ... I would have to say the biggest difference is the lack of "gaps". This would be because of the 24 hr market. I found that technical analysis can be much cleaner in forex. If you trade any chart under 1 hour TF, in forex it is one continous motion. If you try this with stocks that are certain to average probably 1/4 at least of their entire movement in pre and post market trading, you will find that a signal was given to you and your optimal entry would have been 25.30 for a short. Instead a gap occured and it is now sitting at 23.75. Given your projections ... this may be enough to keep you out of a trade.

Regarding fundamental differences ... that is a very loaded question. There are many ... yet there are few. There are literally thousands of individual fundamentals that one can explore in the stock market. For instance, AIG is just one individual financial company. This, while Citi is another, Bank of America another, UBS still another etc etc etc. These alone will sometimes disregard their relative stocks and head in completely different trends. This is because of their very own fundamentals. Now, if you were to trade something like the Diamonds DIA, you would find that much of the same major and core fundamentals that you see at work with pairs in the forex market affect DIA as well. For instance, this credit mess has been affecting carry trades, these same fundamentals may not affect all the individual stocks in that DIA fund, though overall ... you can certainly see the fundamentals at work. These connections change all the time though. Right now the major markets are somewhat correlated to carry pairs, it hasn't been like this for very long though.

To me the difference between forex and stocks is that stocks have a directional bias.

If I were to trade in the stock market, I would never short it because history have shown that the stock market has risen since forever due to economic expansion.

But the forex market fluctuates alot.

I think it was in currency trader's magazine that proves that the stock market is more trendy than forex in the long term. But forex market is more volatile, and that benefit the short term traders.

Don't forget that huge changes in your account balance aren't equivalent to huge changes in price. If you calculate the percentage of price movement in currency pairs, it isn't that high compared to equities. The type of leverage we use makes it seem so.
If you want to hold postions long term, try smaller positions and mimimal leverage. A small, low leverage USD/CAD position held for the past 5 years would have done well.
Of course the leverage and volatility is what attracts us to Forex. Across the board, we have as many opportunities to short as we do to go long. Not so with equities. In fact I read about a successful stock trader who said he taught his students to short the market before teaching them to go long. His rationale was that shorting the equities is so tough that if it could be learned, then long trades wouldn't be much of a challenge.

I just scrolled down and I see I'm repeating everyone else. So a quick answer to part of your question is this: I'd think about small low leverage long term trades along with learning some shorter term strategies to take advantage of the leverage we're given. Ether open an acoount with someone who will allow long and short positions at the same time, or a broker that will allow you to have seperate sub-accounts. I don't believe in being long and short simply for the sake of not exiting a losing trade, but if you had a long term, low leverage trade, certainly over the course of many months you would see a few counter-trend opportunities. Over the past 5 years there were opportunities to scalp USD/CAD long while letting a low leverage short trade ride in the background.

Yet, in forex, currency value can fluctuate just 0.1% in price a day, and you loose 100% of your money!

Thats another BIG difference.

Probably the biggest difference. Take that .1% and multiply times 100 or 200 or 500 or whatever your leverage. Shazzam! Where'd my money go?

I like this observation, as I find myself taking profit and missing a major move at times, thinking at the time of taking profit that I will "just get back in" if it starts to move in my direction again, though due to whatever factors psychological or not I end up not getting back in.

I tend to be a very defensive trader, and I have been defensive just so I could 'not lose' in the market. I have succeeded at that, and have been a little profitable, but I want to become more profitable and am looking at what steps to take in order to do that.