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4 Top Strategies Popular with Forex Traders
The foreign exchange market is the largest and the most liquid one when compared to bonds and equities. The daily trading volume in the worlds largest financial market is about $6.6 trillion. This marketplace is unique and might carry a few surprises for new traders.To get more news about Forex Trading Tip, you can visit wikifx.com official website.
While there are more than 180 different kinds of fiat currencies in the world, the majority of the trades and payments are made using the most popular currencies including the U.S. dollar, the Euro, the Japanese yen, and the British pound.
Other currencies that are popular include the Canadian dollar, the Swiss franc, and the Australian dollar. You are allowed to trade these currencies via forward, swap, spot, and options contracts.
An overview of forex trading
When you trade, you need to follow an underlying strategy that can be leveraged to determine the movement of the particular currency pair. There are fundamental and technical trading strategies that you can follow. The ideal strategy will help the trader analyze the forex market and derive outsized returns while focusing on a robust risk management framework.
If you are a fundamental trader, you will look at the macro-economic data thats driving the value of a currency pair. For example, in case the U.S. Federal Reserve increases borrowing rates, institutional investors will withdraw money from equities in developing markets and park their funds in corporate bonds or treasury instruments that have a higher credit rating.
So, there is a good chance for the Indian rupee to lose ground against the U.S. dollar in such times. Alternatively, if the U.S. government continues to expand its stimulus program, the increase in money supply will lead to inflation and result in a depreciating dollar.
A technical trader on the other hand looks to take advantage of historical trends while trying to analyze the future movements of the currency pair.
Technical traders can also follow forex platforms that deliver real-time alerts on multiple currency pairs as well as in-depth analyses that support the trading ideas or recommendations.
For example, there are online publications that provide comprehensive news and analysis as well as recommendations. Beginner traders can look at the free forex signals by FXLeaders that are provided by experts to benefit from spot market opportunities.
Keeping this in mind, we take a look at a few technical strategies that are popular among forex traders.
Price action trading
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