The Foreign Exchange Market is no doubt the biggest currency market where trillions of dollars are invested each day. Trading in this global market is not easy and requires strategy and skill. There are many tutorials, web pages and books that try to make it easier for investors to trade. As a result the question of the existence of a final and ultimate Forex strategy draws in the investor’s mind.
Handling the money in this market is the crucial factor that decides gain or loss for the investor. Hence the plan of utilizing the money should be developed in the first stage. It can be handled individually, through a broker or using a software known as Forex robot. However, there should be a basic system anyways.
The strategy should be based on three analyses- technical, fundamental and sentimental. The technical analysis is based on studying charts and price movements while fundamental analysis is the knowledge of external affairs like the position of government and central banks etc. the investor should also consider revising the market sentiment as the trading depends on majority’s investment plans. All three must be taken into consideration before any investment.
The next thing that an investor should consider is the studying of the currency market. There are certain limits known as support and resistance levels. They indicate the rise and fall of the rate of currencies. Traders should understand the average pattern along with the charts before any transaction to get benefits.
There are also certain signals and indicators that help in market investment. The trader should first have a brief idea about these to make a perfect deal. The signals known as Bollinger bands indicate the high and low of the market while the oscillators and momentum indicators show the lagging and leading situations of the market. Following these tools is important for the trader.
There will always be a risk of losing money in this market. This is very important as the investor should not risk all the money in the trading account. The low investment may bring less profit, but still the end will see something positive. It depends much on the entry/exit point of the trader. Risk of about 2-3% is recommended.
It is true that there are no strategies as the “ultimate Forex strategy”. Every investor should plan the move to make up a good approach and deal in this ever changing global currency market.