An Overview Of Forex Investing Strategies - Ratinah

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

An Overview Of Forex Investing Strategies - Ratinah

There are two types of FOREX investment strategies:

  • TECHNICAL ANALYSIS
  • BASIC ANALYSIS

TECHNICAL ANALYSIS:

Technical analysis is mostly done by small and medium scale investors.

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

1. Prices reflect all actual market movements. That means prices include everything the market knows like foreign exchange supply and demand, political factors, trade agreements, etc. It is not concerned with what produces the change, but rather deals with the actual change. It works on the assumption that price can only take one of three directions:

  • To the top
  • down
  • to side

2. It relies on market patterns that have been identified as significant. That means factors that are repeated in nature or will produce the desired result.

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

THE VARIOUS TECHNICAL INDICATORS ARE:

1. RELATIVE POWER INDEX

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

2. GRAPH

The graph includes various hills, slopes, curves that develop on the graph over time and reflect some major and minor changes in the pattern. Some of the chart formations include:

  • TRIANGLE
  • FOUR RECTANGLE
  • HEAD AND SHOULDER
  • DOUBLE UP AND DOUBLE
  • PLATE
  • V

3.GAPS

Gaps represent areas on the bar chart where no trades are taking place.

  • UPGAP: formed when the low of a particular day is higher than the high of the previous day.
  • DOWNGAP: formed when the high on a given day is less than the low on the previous day.

NUMBER:

Various number theories are used in technical analysis such as:

  • Fibonacci theory
  • GANN

stochastic oscillator:

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

BASIC ANALYSIS:

This is the place where the current economic, political, financial situation of the 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, tax policies, etc. .

A fundamental analyst studies and evaluates all these factors before taking any decision. Thus helping in long term decision making and making profit in short term with extraordinary development.

Some of the indicators that help in 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.

2. RETAIL SALE

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

3. CONSUMER PRICE INDEX

It reflects changes in the prices of consumer goods.

4. BUSINESS CYCLE

It reflects the various phases that a business goes through. These phases include:

  • EXPANSION
  • PEAK
  • REcession
  • DEPRESSION

5. MONETARY POLICY

It controls the supply of money in an economy.

Trading successfully requires knowledge, time and understanding of the market. You cannot earn continuously in the Forex market due to its volatile nature. So as a trader, you should try to consider 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 are not sure stop and rest for some time.

That's An Overview Of Forex Investing Strategies - Ratinah

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forex investing strategies, tradingFOREX investment

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