Forex Strategy

People need to make money in order to live a comfortable life. They need it in order to pay for the utility bills, pay for food, for education and other things that are necessary in life. This is why people tend to do anything to make money. Some people work in a company, some people prefer putting up their own business and some people trade in the financial market as a career.

One such financial market that you can really make money from is the Forex market. The Forex market is the largest and the most liquid market in the world with trades open for 24 hours a day and exchanges that amounts to trillions of dollars each trading day.

In order for you to be successful in this market, you need to know the basics about the Forex market. You need to be able to know how to trade, when to trade and what to trade. You will also need to know the different trading strategies in the largest financial market in the world which is the Forex.

Knowing about the different trading strategies in Forex will allow you to minimize the risk of losing money and increase your chances of making huge profits.

First of all, it is important that you should remember that the Forex market can give you the chance to earn a lot of money. It is a known fact that people who have traded in this very liquid market have made millions of dollars almost overnight. You also have to know that the Forex market is also a very risky market to be in. It is also a known fact that many traders in this market have experienced losing a lot of money even to the brink of bankruptcy or beyond.

This is why you should know the different strategies that are necessary in the Forex market. Without these strategies, you will be like a blind man crossing a busy intersection with no one to guide you.

First, you need to realize that Forex trading strategies are very different from the strategies used in stoke trading. If you know about the different trading strategy in Forex, then you will really earn a lot of money from this very large financial market.

One of the most useful strategies that you can apply in the Forex market is called leverage. This is one of the most common strategies that you can use in the Forex market and most Forex traders are familiar with the leverage strategy and many have made large profits from this strategy.

If you already have a funded Forex account, you can use the leverage strategy to help you trade more effectively in the Forex market. Leverage strategy works by giving you 100 times the amount of money that you can trade in your deposited account. Therefore, if you do win, your income will also increase 100 times. This will allow better results in your trades.

Another strategy that is commonly used in the Forex market is called the stop loss order. This strategy is used to protect you from potentially losing a lot of money. This works by letting you choose a predetermined point in the trade where you will not trade. Therefore, it will eventually minimize the risks. However, if the movement of the currency is not like what you actually predicted, you will end up losing potential money making opportunity with this kind of trade.

Automatic entry order is another Forex trading strategy that you can use when you trade in the Forex market. This will allow you to enter the Forex market automatically when the price of a particular currency is right for you. The price is predetermined and once it reaches that predetermined price, you will be automatically entered into the trades.

These strategies will help you trade in the Forex market more effectively. It will eventually help you minimize the risk and maximize your income earning potential. However, you should always remember that you should know when you should use these strategies. It is also important that you should remember that there is always the risk of losing money when trading in Forex. These strategies will not necessarily eliminate the risk but will minimize it.

In almost any business endeavor, strategy is an important element that can help in its success or failure. Forex trading is an international, 24 hours a day, 7 days a week, over-the-counter exchange financial market where different nation's currencies are being bought and sold. Here, your strategy can quickly make you a rich man or let you lose your money in a single trade.

Forex trading is always done in pairs. It is well-known to be the largest financial market in the world; therefore, a single investor can't possibly influence the market, which means that your every decision will drive you to either success or failure and you can't blame anyone else.

Forex trading has two kinds of investing strategies, namely: technical analysis and fundamental analysis.

Technical Analysis

Technical analysis is the method of forecasting future movements of the price (securities, commodities, etc); it is based on a chart analysis, technical indicators, and pattern formations. Some people claim that forex trading are quite predictable, technically speaking.

What you need is proper money management because not all strategies work at a 100% rate. Technical analysis will help you determine when to enter/exit positions and where the price of the different currencies is going.

Most technical forex traders use technical indicators, this is a very common technique. A few indicators will do, compared to dozens of them. Quality is what matters and not the quantity. These technical indicators will help in forecasting currency market prices.

Here is a list of the common technical indicators:

- average directional index or ADX; determines the strength of prevailing trends
- exponential moving average or EMA; weight is given to latest data, moving average similar to simple moving average
- moving average convergence divergence or MACD; momentum indicator showing relationships between two average prices on the move
- Fibonacci; this can include Fibonacci time zones, Fibonacci channel, Fibonacci fan, Fibonacci arc and many more.
- Bollinger band; a band is plotted in two standard deviations away from simple moving average
- Relative strength index or RSI; compares the magnitude of recent gains against recent losses to determine the overbought/oversold asset conditions
- Stochastic oscillator; compares closing price of security to price range over a specific period of time
- Williams %R; measures overbought and oversold levels, somewhat similar to stochastic oscillator

Technical analysis systems make use of a combination of a few technical indicators to arrive at a realizable market forecast.

Fundamental analysis

Fundamental analysis strategy studies economic factors of a certain country to forecast its future currency value. It focuses on studies regarding economic, political and social factors that affect supply and demand.

Here is a list of fundamental analysis indicators:

- consumer price index or CPI; measures price changes in consumer services and goods, this is referred to as headline inflation
- gross domestic product or GDP; usually calculated on annual basis, this is the monetary value of a country's finished goods/services that is produced within its boundaries

The financial news is also necessary when making use of fundamental analysis. You should pay attention more especially if you're active on the trade. There different websites that offers up to date financial news, check out the different sites because it can help you a lot in arriving at a good fundamental analysis.

Whatever analysis you choose to use is up to you. Remember that these strategies will only aid you in making sound trading decisions. Perhaps a combination of the two strategies will do you better.

If you're an individual trader, you can check on available internet sites that have further discussions regarding these two strategies. Further research is good for you to get a good grip about the subject matter.

Applying these strategies together with good money management might be your doorway to forex trading success.