Currency Trading

Technical analysis and fundamental analysis are the two basic Forex Trading Strategies and this is exactly the same as in the equity markets.

However, technical analysis is by far the most common of the Forex Trading Strategies used by individual Forex traders.

Here is a brief overview of both forms of Forex Trading Strategies and how they directly apply to forex trading:

Fundamental Analysis aspect of Forex Trading Strategies – If you think it’s hard enough to value one company, you should try valuing a whole country instead.

Fundamental analysis in the forex market is often an extremely difficult one, and it’s usually used only as a means to predict long-term trends. However it is important to mention that some traders do trade short term strictly on news releases. There are a lot of different fundamental indicators of the currency values released at many different times. Here are a few of them to get you started:

• Non-farm Payrolls;
• Purchasing Managers Index (PMI);
• Consumer Price Index (CPI);
• Retail Sales;
• Durable Goods;

You need to know that these reports are not the only fundamental factors that you have to watch. If you do decide to follow a fundamental strategy, you will want to be sure to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with real-time access to this kind of information.

Technical Analysis aspect of Forex Trading Strategies – Just like their counterparts in the equity markets, technical analysts of the Forex trading market analyze price trends. The only real difference between technical analysis in Forex and technical analysis in equities is the time frame that is involved in that Forex markets are open 24 hours a day.

Because of this, some forms of technical analysis that factor in time have to be modified so that they can work with the 24 hour Forex market. Some of the most common forms of technical analysis used in Forex Trading Strategies are:

1. The Elliott Waves;
2. Fibonacci studies;
3. Parabolic SAR;
4. Pivot points;

A lot of technical analysts have a tendency to combine technical studies to make more accurate predictions. The most common method for them is combining the Fibonacci studies with Elliott Waves. Others prefer to create trading systems in an effort to repeatedly locate similar buying and selling conditions.