Forex Investment Strategies

Regarding The Explanation Of The Overview Of Forex Investment Strategies That You Must Know

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Forex trading refers to the 24/7 international exchange market where currencies from different countries are bought and sold. Trading is always done in pairs assuming that the price of the currency being bought goes up and the currency sold goes down. It is the largest and most liquid financial market, so it is impossible for a single investor to influence currency rates.

There are two types of forex investment strategies:

  • Technical Analysis
  • Fundamental Analysis

Technical Analysis:

1. Technical analysis is mostly performed by small and medium investors.

Technical analysis takes into account the factors that actually affect the market rather than the factors that can influence it. So the displayed price reflects all the factors that affect it. Only facts and figures generated by the market are taken into account, and factors such as concerns, hopes, expectations, or other changes are not taken into account. As such, the analysis is generally based on the following assumptions:

2. Prices reflect all actual market movements. This means that prices include everything the market knows such as supply and demand in foreign currencies, political factors, trade agreements, etc. It is not concerned with what produces change but deals with actual change.

It works on the assumption that price can only go in one of three directions:

  • & #61607; to the top
  • & #61607; lowest
  • & #61607; Beside

• Depends on market patterns that have been identified as important. This means factors that are repetitive in nature or will produce the desired result.

• History repeats itself because human psychology changes very slowly over time. This means that market movements are predictable.

The different technical indicators are:

  1. Relative Strength Index:

It takes into account the ratio of upward and downward movement in the indicator and expresses it in the range from zero to one hundred.

  1. Chart:

The chart includes many hills, slopes, and curves that have evolved on the chart over time and reflect some major and minor changes in the pattern. Some chart formations include:

• triangle
Rectangular
• head and shoulder
• doubling and doubling
• painting
• Fifth

  1. GAPS:

Gaps represent areas on a bar chart where there are no trades.

• UPGAP: formed when the lowest level on a particular day is higher than the previous day’s high.

• DOWNGAP: Formed when the high on a particular day is lower than the previous day’s low.

number:

Various number theories are used in technical analysis such as:

• Fibonacci theory
• GANN

random oscillator:

This indicates overbought and/or undersold conditions. It uses a scale from zero to one hundred percent.

Fundamental Analysis:

This is where the current economic, political and financial situation of a currency country is studied. The economic and political conditions of a country depend on many factors such as interest rates, unemployment rates, exports, and imports, per capita income, percentage of the population living above and below the poverty line, inflation, trade relations with other countries, and tax policies, etc.

A fundamental analyst studies and evaluates all these factors before making any decision. Thus helping to make long-term decisions and short-term profit-making with extraordinary development.

Some indicators that help in the fundamental analysis include:

  1. Gross Domestic Product:

It reflects the total market value of all goods and services produced in a country during a given year.

  1. Retail:

It reflects the total receipts from all retail stores in a country.

  1. Consumer Price Index:

Reflects changes in consumer prices.

  1. Duty cycle:

It reflects the different stages that the work goes through. These stages include:

• expansion
• top
• Recession
• depression

  1. Monetary Policy:

It controls the money supply in the economy.

Successful trading requires knowledge, time, and an understanding of the market. You cannot consistently win in the forex market due to its volatile nature. So, as a trader, you should try to think about the technical and fundamental strategies of forex trading and make decisions based on market expectations and trends. Try trading with money you can afford to lose without regret. Trade with logic and if you’re not sure, stop and take a break.

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