Intro to FX Strategies

The fundamental analysis and fundamental trading strategies that are in play in all financial markets are also in play in the Forex market. There are several types of markets and several strategies used to buy and sell assets. Below you will read about a few that are common among the Forex market in particular.

Equities Market: Equities markets use a fundamental analysis to measure a company’s true value. Investments are based upon this calculation.

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Retail Forex Market: In the retail market the fundamental traders evaluate their country’s currencies and economic announcements to find an idea of the currency’s true value. The use of this combination of economic temperature and their previous currency rates will give them a good idea of what to expect in the coming market.

Forex “Carry Trade” Market: There are several strategies used among Forex market traders to get the best profits possible. The Carry Trade is no different. It is simply a strategy wherein traders borrow at a low rate and lend at a higher rate. This provides a gain for the trader, the gain being the difference between the two rates. The trader watches the countries that they are interested in because the country’s currencies are constantly changing.

But why do currencies change so constantly? There are several factors. Some include very fundamental factors, like economic changes, interest rates, and even employment numbers. These things change the value of the currency from day to day.

Forex Technical Analysis & Technical Indicators

Aside from fundamental analysis many traders use other analysis to determine the currency value, including Technical analysis and Technical indicators. Some tools the traders use involve:

  • Trends
  • Charts
  • Indicators

Minimal Rate Inconsistency

Traders understand that there are several factors already affecting the current currency value including economics, political aspects, social change, and psychological factors. So they use technical analysis to give added feedback to improve their chances of profit, and see what the true value of the currency might be.

In addition trend and flow are becoming more and more important as well. The trend of the Forex market for a domestic country is important to the value of the currency. There is also software which continuously monitors any inconsistencies between different currency pairs.

Trend or Range

Most technical traders watch given currency pairs to help determine the direction in which the currency pairs will go. If the currency pairs go sideways they may still stay within range. Figuring out which way they go is often determined by trend lines and they are watched closely.

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