Defining a basic forex trading strategy

The fundamental analysis and technical analysis are the two of the often used strategies in the forex market that brokers like Exness utilize in their day to day trading. The technical analysis is more commonly utilized by the individual forex traders

Fundamental analysis

If you feel it is hard to value a company, then try to do the valuation of an entire country. The fundamental analysis in the forex market is quite complex and is normally utilized in predicting long term trends. But there are some traders that decide to trade only in short term when it comes to new releases. There are various fundamental indicators of the currency values which are released at various times like:

  • The non-farm payrolls
  • The PMI – purchasing managers index
  • The CPI – Consumer price index
  • Retail sales
  • Durability good

The reports are not the only fundamental factors that you have to watch. There are a variety of meetings where the quotes and the commentary can end up affecting markets just as much as any other report.  The meetings are normally called for discussing inflation, interest rates and other issues which affect the currency valuations.

Even wording changes when addressing particular issues – the Fed (Federal Reserve) feels that, even a change in interest rates can end up causing volatility in the market. Thus, two important meetings for the forex traders to watch are the Humphrey Hawkins Hearings and the Federal open market community.

By having to read through the reports and ensuring to examine the commentary might help forex fundamental analysts in gaining a better understanding of the market trends in the long term and allowing for short term traders in profiting from the events which are extra ordinary.

If you decide to choose to follow the fundamental strategy, you have to ensure that you keep handy an economic calendar always so that you are able to know when the reports get released. Your broker might also provide you with real time access to this type of information.

The technical analysis

The technical analysis of the forex trade analyzes the price trends similar to what is happening in the equity markets. The only main difference which exists between the technical analysis and the technical analysis as far as equities are concerned is the time frame because the forex markets tend to be open 24 hours. These are some of the technical analysis which are commonly used in forex trading:

  • The Elliott waves
  • The pivot points
  • The Parabolic SAR
  • The Fibonacci studies

Majority of the technical analysts do combine the studies in making predictions which are accurate.  That is using the common practices of combining the Elliott waves and the Fibonacci studies. Others decide to go along with creating trading systems to locate similar selling and buying conditions repeatedly.

Finding your forex trading strategy

Majority of the traders who are successful ensure to develop a strategy and perfect it with time. There are some who decide to focus on a single study or calculation, while for others; they utilize broad spectrum analysis in determining their trades.